Scottish Parliament, 5 April 2001

410 contributions from 86 members. The official report.

Introduction

Structural Funds

George Reid (Scottish National Party, Mid Scotland and Fife)

The first item of business is a debate on motion S1M-1825, in the name of Angus MacKay, on structural funds, and one amendment to that motion.

Angus MacKay (Labour, Edinburgh South)

The most recent parliamentary debate on structural funds took place in October 1999, when we were near the beginning of the process of preparing the programmes for submission to Brussels. The structural funds programmes for the Highlands and Islands, the three objective 2 regions in west, east and south Scotland and the objective 3 training and skills programme for lowland Scotland have now been approved by the European Commission.

Preparing those programmes has demonstrated successfully the important changes that devolution has brought to the way in which we do European business in Scotland. In particular, I pay tribute to the European Committee's close attention and substantial input to our work as each programme was prepared. We are confident that the committee's involvement in the process of democratic scrutiny has made our programmes more robust, in that they now clearly reflect the interests of the regions and Scotland as a whole, rather than just sectoral concerns. That gives us a firm basis on which to use the programmes to maximum strategic effect in future.

The distinctive Scottish approach to structural funds is notable for its partnership approach and for its commitment to community-level involvement. The involvement of the Scottish partnerships in strategic policy making—through the Scottish co-ordination team and its sub-groups, and the sustainable development and equal opportunities forums—is highly valued by the Scottish Executive.

I draw attention to the important steps that we have taken to improve the administration of the structural funds programmes to underpin our objective to make them more strategic and to leave a legacy from this round. The new monitoring committees for all five programmes are more strategic than they were before. For the first time, local authority elected members are serving on them, as well as representatives from the private sector and trade unions. The new monitoring committees have already demonstrated their ability to take a strategic approach to European programmes. I am certain that they will continue to develop that approach in the coming years, particularly through the new annual review process, which is demonstrating its value in concentrating minds on finding ways of continually improving the delivery and impact of the structural funds.

The bottom line is that the use of structural funds in Scotland should be about tackling poverty, through promoting social justice and a lifelong learning culture, and establishing equal opportunities for all. For example, in the field of social justice, the Scottish Executive set out its overall policy priorities for the current legislative period in its programme for government. We have developed our social justice agenda, first through the social inclusion strategy that was launched in March 2000, then through the report "Social Justice. . .a Scotland where everyone matters" in June 2000.

That report established priorities, such as empowering communities to make decisions and influence others, building skills and confidence, providing the right services and products and preventing any possibility of a digital divide. It emphasised also the role of social inclusion partnerships in regenerating Scotland's most deprived neighbourhoods, in tackling child poverty in partnership with the UK Government, in working to regenerate the most disadvantaged communities to ensure that decent affordable housing is available to everyone, and in promoting equality of opportunity and community development.

Margaret Ewing (Scottish National Party, Moray)

I am listening with great care to the minister's concept of funds being used to tackle poverty and influence social inclusion. Is he satisfied that within the voluntary sector, where European social funding is so vital, the elements of bureaucracy are not such as to deny the sector access to funds?

Angus MacKay (Labour, Edinburgh South)

Yes, I am. As we move into the new round of awards, we are actively working with the voluntary sector on transitional arrangements, to ensure that the voluntary sector is equipped to cope with the changes and demands that are being made. I am satisfied that we are addressing the issue head on.

The issues that I have outlined coincide with the aims of the European structural funds, which are designed to improve the economic and social cohesion of the targeted regions. For example, the west of Scotland objective 2 programme will use all the available funding for community economic development to fund projects in social inclusion partnership strategies. Equally, European structural funds do, and should, help to underpin our enterprise strategy. The funds in Scotland reinforce and add value to the Executive's support package for small and medium enterprises through the many schemes that they part-fund, which are run by, among others, local authorities and enterprise companies, to support and develop small and medium enterprises. All programmes include priorities that address the establishment, support and growth of SMEs as fundamental elements in increasing the economic cohesion of the regions. Those are just two examples of how we can best deploy structural funds to help to create the Executive's vision of a fairer, more prosperous Scotland.

We are active also at local level. In particular, we now participate in the advisory groups, which are key bodies in preparing recommendations for project approval. That is an important development, because more direct involvement by the Executive helps us to engage more fully and at an earlier stage with the partnerships that put so much work into making a success of structural fund interventions. That active engagement will ensure consistency between what is proposed at local level and our aims at national level. It is an excellent example of partnership working between the Executive and local bodies.

We have taken further significant steps to ensure that the new programmes are implemented in a way that promotes best value. All applications for European funding must now demonstrate how the proposed project represents good value. That is a critical consideration in the appraisal process. We are also working closely with partners and the programme executives to develop a more strategic approach to project development and implementation, to avoid duplication and ensure that a focus is placed on performance and outputs. Increasingly, we will focus on area-based strategies. All those measures—binding together local economic forums, community planning and social inclusion partnerships—are critical to developing maximum value for money. We will need time to make that work in practice, but we are heading in the right direction.

We have also taken steps to streamline the process of administration of structural funds, as recommended by the review of project management executives that was carried out on the Executive's behalf by a team led by Lex Gold of the Scottish Chambers of Commerce in early 2000. The team's report considered that we should retain the best aspects of the Scottish model of implementing structural funds. In particular, we should continue to manage the programmes in an open and transparent way with strong input from local and regional bodies, rather than use them as an adjunct to central Government programmes, as is the case in some other parts of the European Union.

Those who are involved in implementing the structural funds programmes have done much work over the past year to implement the recommendations of the review. Changing how things work can be a difficult process in any circumstances, but it was particularly difficult for the many bodies throughout Scotland that have become dependent on structural funds for their operation. We are being as sympathetic as we can be during the transitional period. I mentioned that we are actively engaged with the voluntary sector, but we need to move to a system for the future whereby each project application can demonstrate that it reinforces and adds value to existing activities.

The attempt to leave a lasting effect is as important for the European Union as it is for us in Scotland. We are fortunate that the EU's priorities and ours chime extremely well together. We have been asked, as have all managing authorities, to embed the so-called horizontal themes of equal opportunities and sustainable development in the delivery of structural funds. We take that seriously. If we achieve our ambitions, the structural funds should produce a lasting impact for Scotland and Europe beyond the current generation.

The programmes are now being implemented and awards are being made. Over the past four months, important awards supporting projects in business development, infrastructure and training support have been made in the Highlands and Islands and objective 3 areas. I am particularly glad to be able to announce today a series of awards for the south of Scotland amounting to nearly £6.5 million—supporting nearly £16 million-worth of projects—which I hope will help to support the current process of recovery in the rural economy.

Christine Grahame (Scottish National Party, South of Scotland)

The Executive has announced an objective 2 support package of £6.5 million for the south of Scotland—I take it that that is what the minister has just announced and led on. Is that money a slice of the total European funding of £45 million for the south of Scotland?

Angus MacKay (Labour, Edinburgh South)

That is correct. I could say more, but that answer is succinct.

We look forward to announcing further approved projects for the west and east of Scotland objective 2 programmes in the early summer. Objective 2 projects will be on business and social development and will support the economies of many parts of the country.

For most of us, structural funds are the most visible presence of the European Union in Europe's regions and countries. Structural funds are the key element of the EU's regional policy to support well-planned economic development where it is most needed. Awards of structural funds are therefore an important display of European commitment to supporting Scotland's regeneration.

However, we are not involved in European funding simply because of the resources that it brings to Scotland. We have a much wider agenda, which will ultimately act to Scotland's benefit. European funding programmes are designed to meet European objectives as well as UK, Scottish and local objectives. That is part of their strength. When the EU expands to include countries from central and eastern Europe, the relative balance of European support will flow to the new member states. It is essential that we work now to ensure that Scotland plays an effective role in helping to shape the new programmes. We must also work now to ensure that, when resources diminish, our involvement in the European Union pays practical dividends in other ways, through funding support in Scotland.

That is why we were delighted to welcome to Scotland last week the president of the European Investment Bank, Monsieur Philippe Maystadt. The European Investment Bank was established by the Treaty of Rome to provide loan support, guarantees and finance for regional development. It has invested in Scotland for many years, in projects such as the development of our oil and gas industry, transport infrastructure and, more recently, the development of the public-private partnerships that have been successfully implemented for schools in Falkirk and Glasgow.

I am especially glad that our discussions with Monsieur Maystadt helped to develop some important possible joint projects with the bank. Subjects that were covered included possible investment in the steps that our universities and enterprise bodies are taking to promote the commercialisation of research and work to develop the regeneration of Glasgow, public transport infrastructure and information and communications technology networks. Those are all important policy priorities for the Executive and I am delighted that the EIB is keen to work with us on them.

Another key strand in the development of our approach to the effect of enlargement on European finance is to try to work closely with the accession states to develop their institutional capacity to implement structural funds programmes. Those links are important for several reasons. They show important countries in central Europe and future EU partners the expertise that we have gained in the past 20 years in core elements of EU business. The links are a valuable opportunity for developing contacts on wider issues. We are receiving regular inquiries from other regions of Europe about the possibility of opening regional offices in Scotland House in Brussels. The links show that Scotland is willing to grasp fully the substantial commercial opportunities that enlargement will bring. They also provide a means of helping to shape the future debate on the development of European funding.

That point is particularly important to the Executive and should be important to all members. Structural funds are only part of Scotland's overall relationship with Europe, but they have helped to underpin a strong level of commitment to the EU from all parts of the country.

Scotland is becoming one of the Community's richer regions. That will be inevitable after 2006. We cannot expect to receive as much from structural funds as we do at present. Nevertheless, we retain a strong interest in ensuring that Scottish needs and concerns are properly factored into the process.

Alex Neil (Scottish National Party, Central Scotland)

rose—

Angus MacKay (Labour, Edinburgh South)

Against my better judgment, I will give way to Alex Neil.

Alex Neil (Scottish National Party, Central Scotland)

I would like to get the picture straight. Scotland is not becoming relatively more prosperous; other areas are becoming relatively poorer, especially as the EU expands and brings in other Mediterranean and eastern European countries. The minister has not mentioned what will happen when the EU expands and the funding for all the programmes reduces dramatically in four, five or six years' time.

Angus MacKay (Labour, Edinburgh South)

Alex Neil is wrong. Scotland is prospering and becoming a wealthier nation. That challenges us to find new ways forward. The accession states' economies have deep structural problems and those countries have lower gross domestic products than those of the UK and Scotland, so Alex Neil is right to say that when those countries join the EU, we will have to compete for funds in different ways. I do not like to contradict Mr Neil completely, but I just used at least two pages of my speech to outline the steps that we are taking, through contacts with the European Investment Bank, to ensure that future flow funds are available to us after the current round of structural funds ends in 2006 and before then as well. I hope that he accepts that I tried to address that point.

David Davidson (Conservative, North East Scotland)

The minister has not mentioned the financial instrument for fisheries guidance. Last year, the relevant documents were sent out late, no applications were received and no money was paid out. This year, £4.1 million is available. The papers must be in by 20 April. Is the minister on course to ensure that the funds are delivered to Scotland's fishing communities?

Angus MacKay (Labour, Edinburgh South)

I take seriously the point that Mr Davidson makes and I will pursue it to try to ensure that the funds are administered timeously. If Mr Davidson had intervened on a subject that was closer to the topic for debate, I had intended to deal with the Conservative party's record and policy position on Europe.

David Davidson (Conservative, North East Scotland)

Our record is very good.

Angus MacKay (Labour, Edinburgh South)

As Mr Davidson, from a sedentary position, has given me the opportunity, I will deal with that interesting policy position. Would Mr Davidson care to acknowledge that William Hague has some individuals with fairly extreme views in his shadow Cabinet? Those individuals' views would seriously and directly threaten Scotland's capacity to benefit not only from structural funds, but from Europe as a whole. Six members of the shadow Cabinet are vice-presidents of Conservatives Against a Federal Europe, or CAFE. That group's explicit aim is withdrawal from the EU.

David Davidson (Conservative, North East Scotland)

rose—

Angus MacKay (Labour, Edinburgh South)

I will give Mr Davidson the opportunity to intervene when I have finished covering Conservative policy. CAFE says that it wants Britain's relationship with Europe to be fundamentally renegotiated. Its adherents, including John Redwood, believe that we should leave Europe and join the North American Free Trade Agreement.

CAFE's website states:

"we must withdraw from the European Union and negotiate a series of trade treaties that allow us to do business competitively, not only in Europe but throughout the world."

Six shadow Cabinet members are vice-presidents of that group. I am not talking about a group of tinpot Conservative councillors in an English shire backwater. Perhaps Mr Davidson would care to comment.

David Davidson (Conservative, North East Scotland)

I did not realise that the minister read the cultural pages about café society in London. He spoke earlier about federal Europe. The Conservatives have made it clear that we wish to be in Europe, but not run by it. A federal Europe takes away the country's sovereignty. That does not necessarily mean that we wish to leave the European Union. We just do not want it to take over how we run our lives.

George Reid (Scottish National Party, Mid Scotland and Fife)

That is an interesting byway, but we are beginning to stray somewhat from the motion.

Angus MacKay (Labour, Edinburgh South)

Before the debate, several members told me of their concerns about my capacity to talk about structural funds for 20 minutes and their capacity to sustain the debate, so I am more than happy to explore that leafy and interesting byway of Conservative party policy.

I referred not to a federal Europe, but to the growth of Europe through the inclusion of the accession states. I will leave Conservative policy on the EU with this thought—a quotation from the venerable, extremely Euro-sympathetic and balanced Teresa Gorman:

"The Conservative Party under William Hague's leadership has come a very long way towards the position that I have always adopted"—

whatever that is. She continued:

"I'm pleased by the way things are going."

I leave that quotation sticking to the wall.

David Davidson (Conservative, North East Scotland)

rose—

Angus MacKay (Labour, Edinburgh South)

I will not yield to the temptation to give way further on the Conservatives' European policy.

I do not have much time left, so I will say that I think that it is important to debate structural funds. I welcome today's debate. Structural funding has been extremely important to Scotland in the past 20 years. It has given lasting benefits to the development of our economy and society.

The importance of structural funds is recognised not only by us but by the Scottish nationalist party, which in its 1997 manifesto devoted an entire sentence to structural funds. It stated:

"We will ensure that rural and urban areas of Scotland receive maximum help from the appropriate EU funds."

What a radical and far-reaching strategy. By 1999, that policy had evolved down to 12 words—obviously as part of the new process of modernisation that is taking place within the Scottish National Party—with a new, improved and more robust line:

"We will also manage and evaluate European funds to Scotland's best advantage."

That had become the new position. I want to record the Scottish National Party's radical view on structural funds.

I will not intrude on the private grief of the Ewing dynasty with respect to objective 1. An outstanding deal was secured for the Highlands and Islands by the Labour Prime Minister in 1999, but it seemed that different husbands, wives, mothers, daughters, cousins and friends of the Ewing dynasty had different views on how objective 1 status for the Highlands and Islands should be evaluated and whether Inverness should be in, out or shaking it all about.

To conclude, we recognise that, after 2006 and following European Union enlargement, Scotland will receive reduced levels of investment from the structural funds. We should recognise that that reflects the economic progress that Scotland has made—which has been helped partly by structural funds—as well as the future accession of poorer states.

To build on the programmes' concrete achievements, we are already working actively to increase the synergy between structural funds programmes and wider Scottish Executive policies, so that the expertise that has been gained through the implementation of the funds can continue to be used in Scotland.

I move,

That the Parliament welcomes the progress made to develop Structural Funds Programmes in Scotland which will have a lasting effect and supports the steps being taken by the Scottish Executive to develop a broader strategy in relation to European funding issues in preparation for the enlargement of the European Union.

Kenneth Gibson (Scottish National Party, Glasgow)

Perhaps, in response to CAFE, Mr Davidson could form TEA—Tories encouraging assimilation.

The SNP is pleased to state that we support the Scottish Executive's broad objectives on Europe: promoting new technology; the concept of working in partnership; mainstreaming equal opportunities and sustainable development; making social inclusion a critical element of economic development; promoting inclusiveness and sustainability.

Throughout the countries and regions of the European Union, there are disparities in the levels of wealth, economic development and social cohesion. To address those anomalies, the EU implements a major set of initiatives—commonly referred to as European structural funds—that support national policies in the least prosperous regions and in national and regional labour markets. Structural funds are the second-largest item of EU expenditure and consist of four main financial instruments: the European regional development fund, the European social fund, the European agricultural guidance and guarantee fund, and the financial instrument for fisheries guidance—which Mr Davidson touched on.

Funds are allocated on the basis of three objectives. Under agenda 2000, the number of objectives was reduced from six to three. Objective 1 includes NUTS level 2 regions—NUTS is the nomenclature of statistical territorial units—that have a per capita gross domestic product of less than 75 per cent of the Community average. Objective 1 also includes areas with high population sparsity as well as the most remote regions, which are included because of their peripherality. Objective 1 accounts for some 70 per cent of structural funding. The criteria for objective 1 remain unchanged except that the former objective 6 areas have now been included under objective 1. However, the proportion of the UK's population that is covered by objective 1 funding has fallen from a quarter to a fifth since 1999, because of the removal from eligibility of the Highlands and Islands.

Objective 2 includes regions that have major economic and social restructuring needs, rural decline, areas that are experiencing the decline of industrial fisheries, and urban areas in difficulty. Objective 2 funding accounts for approximately 11.5 per cent of structural fund allocations.

Objective 3 funding is for the development of human resources, the modernisation of educational training and employment systems, and combating social exclusion. Objective 3 funding accounts for about 12.5 per cent of structural funds.

The Highlands and Islands lost its objective 1 status in the final round of allocations. That could have been avoided if regional maps had been redrawn to exclude Inverness. Labour members may believe that to be fanciful, but Manfred Beschel, who is head of the unit for structural funds, explained to Mike Watson and me—when we met him a couple of weeks ago in Brussels—how the Republic of Ireland redrew its regional maps.

At the time of negotiation, the Republic of Ireland's gross domestic product stood at 97 per cent of the EU average. To secure objective 1 status, Ireland created a new, artificial region to the west of Dublin and its environs. That region had neither budget nor powers. The so-called border, midland and western region was drawn up to exclude areas of prosperity that could jeopardise access to objective 1 funding. As a result, Ireland will receive £360 million for that region in objective 1 funding and £67 million in transitional relief for the more prosperous southern and eastern region up to 2006.

In contrast, Scotland—a more populous, less prosperous country—will receive only £194 million in objective 1 moneys for transitional relief in the Highlands and Islands. Although that money is welcome, the opportunity to retain objective 1 in the Highlands and Islands and to create a region that would have centred on Glasgow and the Clyde valley was missed. I will develop that point, but the minister is desperate to intervene, so I will let him do so.

Angus MacKay (Labour, Edinburgh South)

I am more than happy to provide an intervention for Mr Gibson.

I have in front of me an excerpt from the West Highland Free Press of, I think, 8 April 1999. I simply wish to quote from it the clearly expressed views of three SNP members of the Scottish Parliament. On tearing Inverness out of the Highlands and Islands—we know that the SNP likes to tear up maps and take things out of one place or another—does Mr Gibson agree with Dr Winnie Ewing, who described the objective 1 status as "a defeat" and a "terrible situation", or with Margaret Ewing, who rejected the idea of tearing Inverness out of the map, saying:

"It's difficult to take the capital of the Highlands and Islands out of the picture and I think they would be very angry about that. You can't talk about the Highlands and Islands without Inverness"

or with Fergus Ewing, who was an SNP candidate at the time and simply

"could not be contacted for comment"?

Kenneth Gibson (Scottish National Party, Glasgow)

I felt as if I was dying of old age listening to that intervention. I make the point that half a loaf is better than no bread.

Why did the Highlands and Islands lose objective 1 status? It lost it because a complacent Scottish Office took its eyes off the ball. Millions that could have gone towards meeting the Executive's laudable new structural fund programme objectives have been lost. Did the Irish just pull a flanker? Hardly. Sweden and Finland, both more prosperous than Scotland, used the same tactic to obtain objective 1 status, creating new regions that could secure funding by way of sparsity. My nationalist colleagues and perhaps even one or two members of the north British parties will conclude that that is because those independent nations of small population were able to use their seat at the top table to achieve success.

Even in our unitary state of the United Kingdom, the tactic was used successfully. The Welsh Office realised early in the restructuring process that Wales, if divided on a north-south basis, would not qualify for objective 1 funding under the new criteria. Such a division did not distinguish between the poor west and the prosperous east of the country. The Welsh Office worked to redraw the EU regional map of Wales and redivided the country on an east-west basis. The new western region, which had a GDP of 72 per cent of the EU average, qualified for objective 1.

If only the new Labour colleagues in the Scottish Office had been as switched on. Overall, Scotland will benefit to the tune of £1.094 billion in structural funds across all three objectives up to 2006. What is the beef? In the corresponding period up to 1999, we received £2.17 billion. The ineptitude of new Labour on structural funds has cost Scotland more than £1 billion.

David Davidson (Conservative, North East Scotland)

Would Mr Gibson like to repeat those figures so that Labour and Liberal members understand what a good job we did for Scotland?

Kenneth Gibson (Scottish National Party, Glasgow)

Perhaps the Conservatives did not do as good a job as they could have done, but they certainly did a better job than new Labour. New Labour has cost the country £1 billion.

On 13 November, Mr MacKay told the Convention of Scottish Local Authorities that structural funds programmes would bring 65,000 new jobs to Scotland. That is fantastic. However, the number of jobs could have been double that if we had received that extra £1 billion. Even our percentage share of UK structural funds has fallen by a third. At the meeting that I had with Mr Beschel, we discussed EU enlargement. The accession of mainly former Soviet bloc countries will provide many opportunities for Scottish industry and commerce—I am glad that Mr MacKay addressed that in his opening speech—but the low standard of living in those countries will inevitably shift almost all structural funds resources from the west to the east of the EU unless the structural funds criteria are altered.

The Scottish Executive must ensure that its voice, which has been something of a whisper to date, is heard in the discussions if Scotland is not to lose out completely. It would also help if an eye was kept on what other nations, including nations of the United Kingdom, are doing.

How are EU structural funds delivered? That question seemed to perplex Mr MacKay's predecessor as finance minister, and the rival for the succession, last year. According to Mr McConnell, the mechanism for EU structural fund allocation has changed since the devolution settlement. Pre-devolution, ESF moneys were transferred via the Treasury and other departments to the Scottish Office and then to local programmes.

In his evidence to the Finance Committee on 13 June 2000, Mr McConnell said that ESF money now comes from the European Commission directly to the Scottish Administration. He also said that ESF is part of the assigned Scottish budget that was agreed during the devolution settlement and can be identified as a separate budget heading in the Scottish budget. He then stated unequivocally that the Barnett formula plays no direct or indirect part in the allocation of ESF. At the same time, he said that allocations to Scotland are part of the comparable expenditure included in the calculation of the Barnett formula.

Mr McConnell further stated that the amount of ESF in the Scottish assigned budget over the next seven years will be greater than the amount that we are allowed to spend. Thus, not only have structural funds halved, but we may be prevented from spending even those moneys that have been allocated. It is hard to imagine how more money can be allocated to the ESF budget line if the money comes direct from the EU to the Scottish Executive. Mr McConnell acknowledged that the process is "complex", but aside from negotiations with the Commission, the transfer of funds would seem to be straightforward if there is, as the former finance minister said, a direct transfer from Brussels to Scotland.

On 13 June 2000, Mr McConnell said:

"The only thing in that which I want to correct is that when the European Commission pays the cheque"—

that is, the structural funds—

"it does so directly to us, as the managing authority. It does not get paid to the Treasury to be passed on to us."

The illustrious David Davidson asked:

"So the Treasury has no place in this?"

Mr McConnell replied:

"The money from the European Commission goes directly to the Scottish Executive, and we pass it on to local projects."

He went on to say that

"the funds go directly to the devolved administration in the UK. We get the funds directly from the EC."—[Official Report, Finance Committee, 13 June 2000; c 654-63.]

Previously, on 30 May 2000, Mr McConnell had told the European Committee:

"The money is transferred via the UK Treasury to Scotland for spending on the structural funds. That money is allowed for in our budget clearly and identifiably and has been for many years, despite the initial difficulties with additionality."

He repeated that later in the meeting, when he said:

"The money is passed from the European Commission to the UK Treasury and then to the Scottish Executive".—[Official Report, European Committee, 30 May 2000; c 700-05.]

We need clarification on the process of transfer between Brussels and the Scottish Parliament and what role, if any, the Treasury plays.

Hugh Henry (Labour, Paisley South)

Will the member take an intervention?

Kenneth Gibson (Scottish National Party, Glasgow)

I would like to, but I am only two thirds of the way through my speech and I am down to my last four minutes. I am sorry, but Mr MacKay's rambling intervention cost me about one minute.

The then Secretary of State for Scotland, John Reid MP, was less than helpful when questioned on the matter by the Westminster Scottish Affairs Committee on 7 September. He refused an invitation to attend the European Committee of the Scottish Parliament, saying:

"I have no intention of speaking to committees or otherwise in the Scottish Parliament because I am accountable to this Parliament."

How humble of him. He recommended that there should be

"greater transparency in the publication of information on how the Barnett formula works in practice with respect to Structural Fund expenditure planning."

I hope that Mr Peacock can clarify the situation in his summing-up.

On 13 June last year, Professor David Bell told the European Committee:

"Additionality is the notion that European funds should be additional to whatever level of spending would have occurred in the relevant country. I am sure that the committee is aware that additionality is currently determined at UK level, which means, for example, that if all of Europe's funds were spent in Lesmahagow, the additionality criteria could still be satisfied for the whole of the UK."—[Official Report, European Committee, 13 June 2000; c 727.]

The European Committee was unable to establish additionality at regional level, thanks to the lack of co-operation from UK departments.

Angus MacKay himself said:

"The requirements and procedures for demonstrating additionality at the European level for the Member State are not compatible, and would not produce consistent outcomes, with programmes at a Scottish level. I therefore do not intend to publish this information in such a way as to 'verify' additionality at a Scottish level."

Yet surely the allocation of structural funds that Scotland receives must be able to be demonstrated as additional. We should be told whether, for example, UK structural funds have been traded off against the UK-EU rebate, as Mr Beschel suspects. Why would the Treasury do that? Because money rebated can be spent as the Treasury wishes. Structural funds cannot.

Funding must also be allocated to match structural fund receipts. For programmes undertaken by the Scottish Office, matching funds must also be found from within the departmental expenditure limit. For programmes undertaken by other bodies, matching funds must be provided from their own budgets. However, those may be largely provided by grants or grants in aid from the Scottish budget.

The European Committee seemed largely satisfied that match funding was being provided, but recommended that

"the Scottish Executive should: (a) investigate the likely availability of match-funding over the coming programming period; (b) monitor the flow of projects and co-funding from the various types of partners involved in the programmes; and (c) provide regular, transparent reports on programme performance with respect to match-funding."

However, it does not appear that any additional allocation within the Scottish departmental expenditure limit has been made for match funding.

On 6 June last year, the Scottish Parliament's Finance Committee and European Committee asked Gordon Brown to give evidence as part of their inquiry into European funds.

In a letter to the Finance Committee, the chancellor declined the invitation and stated that he would not even be sending a civil servant. The European Committee received a similar refusal. In the letter, Gordon Brown said that John Reid would be giving evidence at Westminster. He stated:

"I understand he"—

John Reid—

"has been asked to cover structural funds, among other issues. While I appreciate your wish to hear from Treasury ministers or officials, I feel that on this occasion this is the best way forward."

Mike Watson, convener of the Finance Committee, was not happy with the Chancellor of the Exchequer's response. In the Finance Committee, he said:

"I find the response from the Chancellor of the Exchequer disappointing, but not entirely surprising, particularly given his reluctance to give evidence to the European Committee on the same subject.

However, I do not regard being referred to a meeting that will take place between John Reid and the Scottish Affairs Select Committee at the House of Commons on 21 June as an adequate substitute for hearing the chancellor's evidence. I am open to members' views about how we should proceed. Given that a senior civil servant from the Treasury has already given evidence to the committee, I believe that we are entitled to at least that level of evidence for the inquiry. Otherwise, I fear that suggestions will be made that it is never appropriate for officials or ministers from the House of Commons to give evidence to Scottish Parliament committees. That should not be accepted.

That is my personal view of the matter. Before we decide how to proceed, I invite the views of members of the committee."

Needless to say, other members, such as Mr Davidson, Mr Raffan and Andrew Wilson agreed. Mike Watson added:

"We have asked for the benefit of the Chancellor of the Exchequer's knowledge of the system and our request has been declined."

Richard Simpson said:

"We cannot let the matter rest here because of the precedent that that will set—the Executive should take it up. We should ask the relevant joint ministerial committee to review the process and to ensure that appropriate officials or ministers will make every effort to assist Scottish Parliament committee inquiries. Gordon Brown's letter is unacceptable."—[Official Report, Finance Committee, 6 June 2000; c 628-30.]

I hope that the minister will pursue that matter, as the issues surrounding structural funds are too important for it not to be pursued.

I move amendment S1M-1825.1, to leave out from "the steps" to end and insert:

"steps being taken by the Scottish Executive to develop a broader strategy in relation to European funding issues in preparation for enlargement of the European Union, but notes the failure of the Scottish Office to secure the retention of Objective One status for any area of Scotland by re-drawing the regional map as was successfully done for their own regions by the Welsh Office, Ireland, Sweden and Finland, thus depriving the Executive of vital resources needed to develop its Structural Funds Programmes and reducing the scope, impact and likely success of the outcomes sought by both it and the Parliament."

David Davidson (Conservative, North East Scotland)

We are obviously into panel games. To the SNP I offer NUTS: nationalists under threat in Scotland.

The minister will not be surprised that I cannot agree with the wording of his motion. I was disappointed that after "lasting effect" he did not put "on the Scottish economy", but we will come back to that. I take the opportunity once again to remind the chamber that we Conservatives managed to obtain a 20 per cent share of UK structural fund allocation in Scotland between 1979 and 1998. Members will agree that that is a fairly good record.

Hugh Henry (Labour, Paisley South)

Does David Davidson recognise that, as Angus MacKay and Kenneth Gibson said, the allocation of structural funds is largely to areas that are underperforming and which suffer high levels of poverty and that the success that the Conservatives managed was directly related to their management of the economy?

David Davidson (Conservative, North East Scotland)

I take Hugh Henry's point, but there were other factors, outside the UK economy, which he knows of only too well. Unfortunately, we appear to be approaching a recession—perhaps he would like to address those comments to the Minister for Finance and Local Government.

Unlike the SNP, we do not believe that Scotland should be run on an old-style, collective basis, dependent only on public funding and subsidy. That is why we seek skilful use of partnership funding—we share that view with the minister—especially in co-operation with the private sector.

It is just not good enough for the separatists to moan and groan about bad deals and to blame Westminster for everything. It would be refreshing and interesting to hear from them exactly what they would do if they dragged Scotland out of the UK, which has a voice in Europe, into a new existence of peripherality at the back end of a queue of emerging entrants. Independence in Europe is a joke—I believe some members on the benches opposite are beginning to think similarly about that.

Kenneth Gibson (Scottish National Party, Glasgow)

Will Mr Davidson name the members of the SNP group who no longer believe in independence?

David Davidson (Conservative, North East Scotland)

I did not actually say that. It is obvious that Mr Gibson was not listening.

Kenneth Gibson (Scottish National Party, Glasgow)

Mr Davidson referred to "members opposite". Unless he has a very severe squint, he will have noticed that the SNP group sits directly opposite him.

David Davidson (Conservative, North East Scotland)

I am sorry. Mr Gibson missed what I actually said, but he will be all right when he reads my speech tomorrow.

The UK has collective clout and partnership is the way forward. When Mr Peacock winds up the debate, I would like him to explain the strategy for future partnership with the private sector and not just the strategy for partnership with small and medium enterprises that was mentioned, although it is welcome. I happily agree with the minister on and acknowledge the hard work done by the various local authorities and agencies in preparing the submissions, but I remind him that he himself has a hand in the decisions about what programmes go ahead. If he seriously wants to review the application process, I hope that he will come back to the chamber so that we can discuss it further. I agree that there will be disappointment in some areas that will no longer get the support that they had in the past but, to respond to Mr Henry's question, I suggest that that is perhaps because those areas are now in a better state in comparison to Europe.

The funds must be focused on the areas of greatest need and there must be a definition of greatest need. There will always be winners and losers in that process, but we must target moneys at disadvantaged areas. Angus MacKay referred to certain disadvantaged areas, but the current rules miss certain pockets of disadvantaged housing in Aberdeen, because Aberdeen as a whole is perceived as being reasonably affluent. We must be more focused in our targeting of specific projects. Perhaps that could be dealt with when changes are considered in future.

The Conservatives are committed to enlargement. We may have our differences about involvement in Europe and how much Europe influences our affairs, but we have got a good deal for Scotland over the years and we look to the Government to continue with that. It would be helpful, of course, if the Commission could become more productive and cost-effective in its working, which would release more funds for dispersal.

As some SNP members have said, this Parliament must take responsibility for preparing for the day in five or six years' time when there will be tremendous stresses on our ability to get good resources from Europe. When we get those resources, we must focus them on the best areas for payback—areas that improve employment ability, lifelong learning and infrastructure—not just in the central belt, but in other parts of Scotland. We need the economic drivers to be delivered through those funds; they should not be used only for social projects. If we spend money only on social projects, the social costs of not taking action in the economy now will outweigh any benefit that we have received in the past when the long-term downturn in the economy happens. I would like to hear Peter Peacock's response to that point.

Parts of our economy are in deep trouble at the moment. The problems that face the fishing communities in the north-east are not new. It is just fishing that seems to be under pressure now, but in the past there were huge job losses in some of the driver industries and tool making. The problems must be dealt with as quickly as possible. I beg Angus MacKay to ensure that the objective moneys are used to get in early, to turn round the economy in the areas that are now badly damaged by the downturn in fishing, fish processing and associated industries.

Angus MacKay mentioned moneys for Dumfries and Galloway. I welcome the fact that that money is available and I am sure that my colleagues from that area will do exactly the same, but I also welcome the SNP's question that revealed that it is not in fact new money, but pre-announced money. I wish that the minister and the Executive would stop doing that. They should be specific and say, "This is what we will do with the money, which has already been announced," rather than make out that it is something new. The minister was caught out on that this morning.

I would like Mr Peacock to tell us about the Executive's long-term commitment to changing the rules on matched funding and about what leeway it has in Europe to do so. We are net contributors to Europe and our percentage return will diminish, as everybody has said. We must ensure that we do what we can within the rules to be creative and productive with the moneys that we receive. I said before that the cost of social support can wipe out any gain: I want Mr Peacock to tell us specifically about the points that Scottish ministers are currently considering in conjunction with their colleagues at Westminster for improving the process.

Money can be spent only once. That is a fact of life and something that we have to live with. We must not put off making decisions, as happened last year with the FIFG. It is important that we do not lose moneys at an early stage and it is vital that whatever allocations are made—to the Dumfries and Galloway area, for example—are based on current need. Some of the announcement that was made on Monday was obviously based on the conditions prior to the foot-and-mouth outbreak. I would like the minister to tell us how those figures have altered since the outbreak began and how the Executive perceives the required change. We have heard details of problems in the textile industry and in agriculture in that part of the country, and I know that the people down there will be very anxious to hear clearly from the minister today how he intends to deal fully with the situation.

I know that the Enterprise and Lifelong Learning Committee is looking at changes in the economy as a result of the new technologies, but we must realise that it is not just the old industries that are going down. Job losses have been announced this week in the semiconductor industry and in the manufacturing of personal computers. If those newer industries are also going down, the Executive must take a much more proactive position on the economic drivers that are needed to correct the situation. We must investigate ways of using the structural fund moneys in a sensible manner and we must do so early, rather than put it off. It would be interesting if the minister could tell us whether, because of the needs of the economy at this time, it is possible to draw down future funds. I am not sure of the rules about that, but can a special case be made? Perhaps the minister can enlighten us.

I welcome back Tavish Scott to the land of the living and I look forward to his speech. It would be nice to hear what the Liberals would do about structural funds. As with most policy areas, we have not had a clear statement from them as to what they would do in Europe. We would also like to know whether they still believe in a high-tax economy, because high-tax economies do not encourage economic and social development. The money that goes to Europe comes out of taxation—we agree about that—but the Liberals must explain their policies to us a little more clearly. Doing so this morning would be a good start.

We have done a good job in Europe. The SNP agreed with me about that—we all have our moments.

Euan Robson (Liberal Democrat, Roxburgh and Berwickshire)

Mr Davidson has just praised the investment in Dumfries and Galloway. If the Conservatives have done such a good job in Europe, can he explain why, in 1982, as the map I have with me shows, assisted area status was removed from the very part of the world that he now says should benefit from the money? Can he explain why it took 17 years to recover that status?

Does he welcome the fact that it has been recovered?

David Davidson (Conservative, North East Scotland)

If one looks at the fine print behind that map and at the changes that have taken place in the economy of the area—

Euan Robson (Liberal Democrat, Roxburgh and Berwickshire)

It is all on the map.

David Davidson (Conservative, North East Scotland)

I am sorry, but I cannot read the fine print from here. Yes, help was given to the economy of that area and it partially recovered and, yes, it has new sets of problems, not least foot-and-mouth. I admire the fact that Euan Robson was obviously a geography teacher; he has such wonderful maps to bring to the chamber.

The Conservatives are prepared to work with Europe. There is no doubt about that. What we would like Europe to do is to work with us. We need a Europe of sovereign states. They will work best together and will be able to maintain their identity, but we need to co-operate. We have no problems with that, despite the humour that comes from the SNP benches. We have proved that we can work in Europe. We can be strong for the UK in Europe and we will continue to be so after the next election.

Tavish Scott (Liberal Democrat, Shetland Islands)

And, after the next election, the Conservatives will continue to be so from the Opposition benches, where they are now and will be for many years.

Mr Davidson said it all: the Conservatives are prepared to work with Europe—pause—on their terms. Little more needs to be said on the European policy of the Conservative party.

On fishing, Mr Davidson and many of his MSP colleagues in Scotland take a reasonable line on the reform of fishing policy, in the European context, which is diametrically opposite to the position taken by their colleagues at Westminster. The Conservatives have two positions on reform of the common fisheries policy; if Struan Stevenson is added, arguably they have three positions. The Conservative position on Europe is clear: it is not clear.

Mr Davidson also did that classic Tory thing of running out a few hoary old myths about Europe. The one about bureaucracy is one that William Hague's Tories like to trot out now and again. It might interest Mr Davidson to observe that the staff directly employed by the European Commission number around 15,000, which is roughly equivalent to the average number of staff employed by a large local authority in the UK. Those old myths somewhat defeat the argument. When Mr Davidson challenges all the other parties to say what their policy is, the least that the Tories could do is admit that they have no policy on Europe, other than to seek to withdraw from it.

Ben Wallace (Conservative, North East Scotland)

Mr Scott talks about the Tories down south having a different policy on fishing. Does he agree with his Liberal Democrat colleagues, who yesterday called for the abolition of the ministry of agriculture, fisheries and farming?

Tavish Scott (Liberal Democrat, Shetland Islands)

It is the Ministry of Agriculture, Fisheries and Food.

I know that Mr Wallace was in Westminster last night; I watched him having an interesting debate on "Newsnight" about the Army, which is a subject that he seems to speak on regularly. Perhaps he should try to find the seat that he seeks and he will eventually get down to Westminster to talk about it.

Ben Wallace (Conservative, North East Scotland)

You have not answered the question.

George Reid (Scottish National Party, Mid Scotland and Fife)

Order.

On you go, Mr Scott.

Tavish Scott (Liberal Democrat, Shetland Islands)

I am sorry—you took me aback, Presiding Officer. I thought that it was Ben Wallace, not you, who was shouting at me.

George Reid (Scottish National Party, Mid Scotland and Fife)

He was shouting at you.

Tavish Scott (Liberal Democrat, Shetland Islands)

You shout better than he does.

My party argues for fundamental reform of MAFF at Westminster, but that is an issue in England and Wales, not in Scotland.

I thought that it would be good that Kenny Gibson was moving the SNP amendment today. I thought that it would raise the temperature of the debate, if not the tone. However, Kenny's heart was not in it today. He usually brings lots of passion to a debate, but I did not think that there was much passion in his speech. Many of his arguments were undermined.

Kenny Gibson did not give way to Hugh Henry. I was thinking, when Hugh was seeking to intervene, that if Kenny had considered the recommendations in the 6th report 2000 by the European Committee, on European structural funds, that would have answered many of the questions that he asked in his speech.

The SNP cannot quite decide whether we are a prosperous nation or a poor nation. When we have a debate on Scotland generally, SNP members state that potentially we can be a great, prosperous nation, but when we discuss structural funds, we must be a poor nation as we are not getting enough funds.

It would be very important if the SNP could sort out its position.

Christine Grahame (Scottish National Party, South of Scotland)

I am delighted to take Tavish Scott out of the pain of his confusion. An independent Scotland would be prosperous, but under the union we are diminishing.

The two MSPs who are sitting behind Tavish Scott—Ian Jenkins and Euan Robson—represent, as constituency MSPs, the Scottish Borders, which is the poorest region in Scotland.

Tavish Scott (Liberal Democrat, Shetland Islands)

That is what the SNP likes to do, and Christine Grahame is probably the worst protagonist of that argument. She talks down an area of Scotland that she should try to talk up.

In fairness to Mr Gibson, at least he showed much more class than his colleague, Christine Grahame, and made a much more positive contribution. As usual, the SNP cannot decide what it believes on these matters.

Structural funds have been of significant benefit to Scotland in boosting economic development projects in areas of lower economic performance, especially in areas making the transition from traditional heavy industries, along with peripheral and rural areas such as the Highlands and Islands.

Over the coming six years, Scotland has been allocated more than £1 billion by the European Union. As other members have mentioned, that represents a major investment in economic regeneration, the labour market, education, training and development.

The latest programme will run until 2006 and, as the minister stated, it is unlikely to be repeated as regional development funds will focus on the new member states from eastern Europe. It is perhaps worth considering that the emerging democracies and economies of the former eastern bloc are in need of that investment. They pose huge challenges to Scotland in specific industrial sectors such as agriculture and in the new economy, with their propensity to offer cheaper wages in competition with Scottish companies.

Structural funds are vital in ensuring that the whole of the European Union benefits from closer economic integration. It is also important to recognise the European Commission's cohesion report, which was published in January. It considers the regional imbalances and the future of structural funds as enlargement looms large.

Those issues of how the wider Europe develops are important in a debate about how best to maximise the advantages of the funds that will come into Scotland before 2006.

Kenneth Gibson (Scottish National Party, Glasgow)

I am sorry that I was not as passionate as usual, but I try not to be too predictable.

Can Tavish Scott advise the chamber whether the Liberal Democrats still believe in a united states of Europe?

Tavish Scott (Liberal Democrat, Shetland Islands)

The Liberal Democrats never believed in a united states of Europe.

The important development in constitutional politics, not only in the United Kingdom, but throughout Europe, is that the principle of subsidiarity must apply. That means that decision making is devolved to the lowest applicable level. That is the guiding principle that the Liberal Democrats take into the debate about Europe, as well as the debate about constitutional reform generally. That concept, and how it will work in Scotland and across Europe, is much more important than fragile and superfluous arguments about phrases such as a united states of Europe.

It is essential that the value of funding is maximised to close the economic gaps between the different regions of the European Union. Liberal Democrats support the concept of regional development programmes and see them as a major benefit of the European Union, which has recognised the need to manage and address economic imbalances. The programmes are in place to deliver the funds, but the Scottish Executive must work with and support local authorities to ensure that appropriate match funding is in place to deliver key projects.

Given the ghastly and profound difficulties facing the south of Scotland, especially Dumfries and Galloway, it is appropriate to consider what can be done to help in the short and long term. The Scottish Executive has rightly announced a package of funding for tourism and business development in the south of Scotland. I briefly attended the Scottish travel fair in Glasgow yesterday. There is a profound sense, among tourist boards in that area and across Scotland, that there is a need for aid. The Executive is taking that forward positively.

Adam Ingram (Scottish National Party, South of Scotland)

Is Tavish Scott aware of the LEADER programme, which has been operating in Dumfries and Galloway for some years? It has contributed about £20 million to a variety of projects in the area, including tourism development and farm diversification projects. We still await an announcement from the Executive on its future in Dumfries and Galloway.

Tavish Scott (Liberal Democrat, Shetland Islands)

I am not a minister in the Executive; I am sure that Mr Peacock will pick up that issue in his speech. Mr Ingram might want to intervene during Mr Peacock's speech at the end of the morning's proceedings.

Both the Borders and Dumfries and Galloway will benefit from structural funds. As Mr MacKay mentioned, some projects have already begun, with, I understand, a total value of some £16 million.

Christine Grahame (Scottish National Party, South of Scotland)

The minister referred to only £6.5 million.

Tavish Scott (Liberal Democrat, Shetland Islands)

No. It is £16 million in total. Perhaps Christine Grahame should check her figures.

The first tranche is a result of the Borders economic forum, a model that I understand the Minister for Enterprise and Lifelong Learning has taken forward in other parts of Scotland.

Unlike those who constantly whinge from the sidelines, I congratulate all the partners that have played a positive role in making progress, including Scottish Enterprise Borders, Scottish Borders Council, the tourist board and many others. I am sure that my colleague, Ian Jenkins, will elaborate on that if he catches your eye, Presiding Officer, later on. He and Euan Robson, along with local MPs, Mike Moore and Archy Kirkwood, have played a constructive role in making progress on those issues.

Funds need to be refocused towards rural areas that are affected by the foot-and-mouth crisis, taking into account the longer-term effect that the crisis will have on employment and specific business sectors. The important point for both the Borders and Dumfries and Galloway is that they can least afford the loss of economic activity and must not fall further behind.

I shall make a couple of brief comments on the Highlands and Islands transitional programme. Telecommunications have been greatly improved in the area with the help of structural fund support, as part of a £5 million investment. The original target was between 500 and 600 jobs, but several times more than that have been created.

Telephone networks are being upgraded from analogue to digital, and Scottish Telecom has introduced an element of competition against British Telecom. As a result, the region could soon be on a level playing field with the rest of Europe in its telecommunications infrastructure.

Christine Grahame (Scottish National Party, South of Scotland)

Will the member give way?

Tavish Scott (Liberal Democrat, Shetland Islands)

No; I shall carry on. I have given way to the member already.

It is worth recognising that much of that investment is the result of work by the former Highlands and Islands Development Board and Highlands and Islands Enterprise, both of which had the vision to put public money into information technology. I congratulate those who had such vision at that time. The modern telecommunications network has been a strong factor in attracting new teleservices and IT-based companies to the area. However, as Mr Peacock is aware, there is continuing concern that further upgrading of the network is required to prevent the loss of such advantages. In my constituency, I am involved in discussions that I hope might lead to a fibre-optic cable that will link Shetland to the mainland, with a spur to Orkney. Those areas have the positive attitude and approach that might lead to benefits for business and domestic customers.

Funding from the European regional development fund is available to assist the development of renewable energy potential. Although that includes assistance for improvements to network connections in remote areas, developing such energy resources on Scotland's west coast is dependent on exporting that power source to the national grid, and work must continue on that matter.

On other programmes, I note that, in the European Committee's report on the application and project appraisal process for European structural funds, it has commented on the need to co-ordinate activities between various programmes and objective 2 and 3 areas. I am sure that the minister will assure committee members and the Parliament about any progress on that issue. Indeed, I recollect that Lex Gold gave evidence on monitoring and other issues to the European Committee in Glasgow some months ago. This morning, the minister mentioned the implementation of the recommendations of Lex Gold's review.

I want to mention one constituency example in relation to the FIFG, about which David Davidson raised an important point. That funding mechanism has gained some notoriety of late. According to some representations that I received late last night, there is some confusion over the deadline for the first round, which was 28 February. I understand that some applicants were advised that they could submit applications after that date, which is at best unfair, as a number of Shetland businesses were told that they were too late. Although I do not expect the minister to respond to that point today, my letter is in the post and I hope that he will address the issue.

Structural funds must leave a lasting legacy of investment in Scotland. It is the role of the Scottish Executive, working—as in the Borders—with all relevant parties, to ensure that the investments made between now and 2006 stand the test of time for the communities that they serve.

Hugh Henry (Labour, Paisley South)

I do not know whether the minister, fresh from the adrenaline buzz and emotional rollercoaster of watching Hibs, needed some balance in his life, but I am sure that the debate is providing an alternative to that kind of excitement.

I congratulate Kenny Gibson on his speech. Although he read it very well, I am not sure that he quite understood it, and there were several points on which he could have done with advice and counsel. In passing, I want to mention that, on the question of additionality, the European Committee's 6th report—which was supported by SNP members—states that

"the Committee considers that Scotland is receiving an appropriate share of the Structural Funds allocated to the UK by the EU."

However, I should emphasise that a debate on structural funds sometimes brings out the worst aspects of the debate on Europe, because people start to judge Europe's contribution to Scotland merely in financial terms. Europe is much more important to us than that, and I hope that we will not judge success or failure by our ability to attract structural funds, important though they are.

That said, structural funds have been a success story. We started off with many impoverished and deprived areas, and although there is still much evidence that such areas exist, structural funds have made an important contribution to tackling some of their most pernicious problems. Although we should congratulate the Government and local government on their work over many years, we should also congratulate the European Union and the Commission on the structural funds initiative and the attempt to disburse money to areas of greatest need. Furthermore, the Commission has often shown imagination and flair in the management and application of structural funds, and many layers of government throughout Europe could copy its approach with some success.

There is evidence in Scotland that structural funds have been used well, and the country is cited as a good example of an area that can successfully apply for and manage such funds. From various comments to the European Committee, it is evident that other areas consider Scotland's management of structural funds as a role model.

I also want to congratulate the Executive. Much of the European Committee's first year was spent on structural funds issues, and we always found the Executive to be responsive and, through the previous minister, ready to give evidence to us. Furthermore, the Executive has been willing to respond to some of our concerns, particularly in relation to the problem of the application of funds to the voluntary sector.

However, the Executive still needs to address a number of issues. For example, I have received some representations from voluntary organisations on payments to the voluntary sector. In particular, the organisation One Plus has contacted me about the Scottish Executive payment schedule. Although the guidance note from the Executive states:

"Every effort will be made to ensure that correct claims are processed within a four-week time scale",

a number of voluntary organisations have found that that is not being applied. In the case of One Plus, the first advance of 37 per cent requested from the Scottish Executive took seven weeks to arrive; and to date, the organisation has not received the remaining 63 per cent. If that process is not speeded up, it will have a serious effect on voluntary organisations throughout Scotland. I hope that the Executive will quickly address that issue.

Yesterday in Paisley, I spoke at a conference organised by the Scottish Council for Voluntary Organisations for many west of Scotland areas on the local social capital project, which is largely financed by the European social fund. We heard example after example of imagination in local communities, which were directly benefiting from the application of structural funds.

There is practical evidence that structural funds have been used to good effect. However, much more needs to be done, particularly on the LEADER programme and why the committee was not given sufficient opportunity to comment on it. Although we cannot rest on our laurels, we can build on some of the good examples that have been developed over many years.

Colin Campbell (Scottish National Party, West of Scotland)

As other members have dealt with the broad sweep of structural funds, I will be marginally parochial about the issue and talk about the Clyde urban waterfront regeneration zone, which I suspect will be unfamiliar to most members but which has been included in the URBAN II programme. That programme will focus on two areas—Port Glasgow and Clydebank south—and involves £8 million of ERDF investment that will run to the end of 2006. I am absolutely delighted that those areas have been chosen. The funding will be matched from domestic sources, which will give an overall total of £16 million.

However, I have stumbled across a little difficulty. According the EC guidelines of 28 April 2000, the minimum number of people for an URBAN II project is 20,000, although exceptions can be made for populations of 10,000. Clydebank south fits neatly into that special 10,000 limit category. However, the application is a joint submission for both Clydebank south and Port Glasgow, and we must add the populations of the two areas together to get a total for the project.

The guidelines make it clear that the EC lays down no upper limit on the size of the population in a single project to be funded by URBAN II; however, I understand that the United Kingdom Government arranges everything with the Commission. The Scottish Parliament information centre's note states:

"It is DTI that negotiates with the Commission over the amount of funding and the concomitant conditions for the UK."

I believe—although I am almost praying to be corrected by the minister—that the Department of Trade and Industry has set an upper population limit for an URBAN II project at 24,000 people. That is a serious proposition. Adding Port Glasgow's 18,000 people to Clydebank south's 10,000 people produces a total of 28,000 people. As the Clyde urban waterfront regeneration zone URBAN II project has been approved in principle as a single project and as detailed submissions are being completed for a deadline of the end of April, which I gather has already slipped from an original deadline in November, I sincerely hope that that limit of 24,000 people is not set in stone.

The EC indicates nine URBAN II areas in the UK. I cannot believe that all those areas will reach the UK's arbitrary maximum population total of 24,000; there should be some flexibility within the gross UK population total and the gross funding allowed by the Commission.

I pose the minister the following questions. Will he confirm or deny that the UK Government has imposed a 24,000 population maximum for each URBAN II project in the UK, and that that limit will apply in the west of Scotland? If that maximum figure is less than the joint population totals for Port Glasgow and Clydebank south, will he acknowledge that there is no upper limit in the Commission's URBAN II guidelines? Will he negotiate with the UK Government and the Commission to ensure flexibility in the application for Port Glasgow and Clydebank south?

Does the minister agree that, whatever happens, the promise of URBAN II for all the people of Port Glasgow and Clydebank south—which has already been given—must not founder, even in part, on the rock of administrative rigidity or because we are £1 billion short of previous funding in the UK? Each of those places has an identifiable community and should be treated as such: no ward or streets should be pulled from them to meet criteria that have been laid down by the UK Government, although the Commission has set no upper population limit.

Irene Oldfather (Labour, Cunninghame South)

I shall concentrate on the forward strategy, but I begin by looking back and acknowledging the role of partnership organisations throughout Scotland in maximising the benefits and opportunities of European funding. Without good planning and robust proposals, Scotland would not have been able to draw down from Europe the huge amounts of money that we have successfully managed to access and utilise. As Hugh Henry pointed out, the European Commission has described Scotland as a model of good practice. It is especially appropriate to recognise the efforts of voluntary sector organisations—some of which have limited staff resources—and their perseverance over the years in getting to grips with the complexity of applications and the difficulties of funding, to ensure that the most vulnerable in society have benefited.

The motion refers to the

"broader strategy ... in preparation for the enlargement of the European Union."

It is important to look forward as well as back. We should do so bearing in mind the objectives of structural funding. Structural funds are the European Union's regional policy tool to promote greater social and economic cohesion between the rich and the poor regions of Europe, and it is inevitable that, as Europe enlarges, some of that money will move east. We must consider strategies to maximise those opportunities.

The European Commission estimates that around 30 to 40 per cent of all EU funding expended in the poorest member states returns to the richer countries in the form of purchase of equipment or expertise. A House of Lords inquiry into structural funds also notes:

"There are obvious costs to the wider society of high unemployment and areas of concentrated multiple deprivation"

across Europe. It continues:

"Equally, there are wider benefits from increasing cohesion".

Therefore, improving the quality of life in poorer regions brings benefits for us all. With the challenges of enlargement, there are opportunities for the sharing of public and private sector expertise and the expansion of markets. It is said that Germany stands to increase its gross domestic product by 0.5 per cent as a result of the enlargement of the EU, and I believe that Scotland can also benefit.

However, I issue a word of warning on two fronts and ask that, in future discussions, the minister make appropriate representations to UK colleagues. First, structural funds must not be used directly or indirectly to displace jobs from one part of the European Union to another. The Committee of the Regions has taken a close interest in that matter and, in a recent opinion on the impact of the policy, it concluded that it

"is concerned about distortions of the Structural Funds' fundamental aims. The aim of EU regional policy should be to ensure that direct subsidies do not simply lead to a shift in existing jobs from one area of Europe to another one."

There is a danger that a level playing field will not be in place in the transitional stages of accession, and that the lack of robust conditions of employment and workers' rights might disadvantage member states. National Governments and the Commission must be vigilant on that issue and must look for a way in which to reassure existing member states that social and environmental standards will be maintained throughout Europe.

Secondly, in developing future strategies on structural funds, the minister should give consideration to supporting the idea of a structural fund instrument to deal with the issue of asymmetric regional shocks. When a crisis emerges—whether a natural disaster, such as flooding, or an economic difficulty affecting employment in one European region—instead of people having crisis meetings day and night over three days and arriving at a conclusion at 5 o'clock in the morning, when everyone is worn out, there should be a regional policy instrument, supported by a fund and objective criteria, to allow speedy action to be taken.

The Presiding Officer is indicating that I should finish, so I shall have to leave the other points that I wanted to address. I conclude by saying that Scotland has benefited tremendously from its partnership with Europe and that we must continue to play an active role in determining the future disbursement of regional funds.

George Reid (Scottish National Party, Mid Scotland and Fife)

Speeches must be kept to four minutes, so that all members may speak.

James (Conservative, Lothians)

Irene Oldfather is correct to say that structural funding makes a huge difference to the areas involved. I ask the minister to consider ensuring greater transparency in the awarding of funds. The recommendation of the European Committee's 6 th report 2000 was that there should be

"greater transparency and detail in the reporting of the relationship between annual Structural Fund expenditure and Departmental domestic spending in Scotland".

I note also that the sums that are being made available to Scotland through structural funds are now 10.8 per cent of the UK total whereas, between 1979 and 1999, the allocation to Scotland was some 20 per cent of the UK total. There has been a massive drop in the percentage of UK structural funds that are allocated to Scotland. The minister will argue that that is a result of changed circumstances. However, because of the change of circumstances for Scottish farming communities as a result of the foot-and-mouth outbreak, and for the tourism and fishing industries, I hope that the minister will fight for Scotland's interests. Some areas may once again satisfy the criteria for structural funding, and I hope that, in future discussions, he will fight our corner as hard as possible.

Because of the enlargement of the EU, this must be considered the last time that Scotland and Britain will gain such a substantial proportion of structural funding. In future, structural funding will inevitably be directed to member states that are less affluent than we are. Funds should therefore be targeted at strategies for sustainable economic development. It is also extremely important that we maximise the use of those funds while they are available. That is especially important considering that, in the past few days, redundancies have been announced at Compaq and there is a threat of additional job losses at Motorola. Long-term strategies with a lasting effect on the Scottish economy must be a top priority and the good work by agencies such as the Scottish Enterprise network must be built on.

We must not fail to recognise the essential importance of using EU funding in times of crisis. In that context, I again mention the fishing industry, which needs our support. In recognising the threat of a possible forthcoming recession and the problems that are faced by our electronics industry, it becomes apparent that the lion's share of the funding must be targeted towards employment opportunities and the Scottish infrastructure. In welcoming EU enlargement, we must also recognise the need to make use of the European structural funds for the maximum benefit to Scotland and prepare for the day when funds will be targeted on less-affluent members. I would be glad if the minister could assure Parliament that he will fight our corner as hard as possible in the light of rapidly changing circumstances.

Christine Grahame (Scottish National Party, South of Scotland)

Of course I will focus on the Scottish Borders. I never talk the area down but I am always straightforward and honest about it. The area has the lowest wages in Scotland—£50 a week less than the average—which is the legacy of 30 years of Liberal Democrat representation. No wonder Tavish Scott took a cheap and inaccurate verbal swipe at me. During his speech, I tried to ask him about the £6.5 million slice of the funding, and I say to the minister, who had better start paying attention, that I have before me two press releases from the Scottish Executive that are relevant in this context.

The second paragraph of the press release that is headlined

"Minister announces measures to assist businesses affected by foot and mouth"

refers to details of a £6.5 million European objective 2 support package for foot-and-mouth disease. But, lo and behold, in the press release that is headlined

"Angus MacKay announces European structural funding for the south of Scotland"

we once again read about the £6.5 million of EU money. That money has absolutely nothing to do with a rescue package for areas affected by foot-and-mouth disease but was structural funding that was going to the south of Scotland anyway. Confusing? Yes. Deliberately so? Yes. I look forward to clarification.

The money that has been earmarked for the south of Scotland—£45.7 million, which, after match funding, goes up to £90 million—is peanuts when one considers that it would cost £200 million to reinstate the Borders railway line to Carlisle, which is not a big task and one that I have been known to talk about on occasion. It is certainly peanuts compared to the £1 billion that has been spent on the millennium dome. Furthermore, one of the conditions that attaches to structural funding that previously did not—that it cannot be used for main capital funding projects—will limit the impact that it will have on the rural economies that are under stress.

The Borders has lost 1,000 textile jobs, and foot-and-mouth disease has put farming into suspended animation—that was an unfortunate slip of the tongue; I meant into suspension—at a time when the market was already economically depressed and tourism has stopped. Even the hope and glory that is the electronics industry is in trouble. The Southern Reporter today tells us that the sector is suffering a malaise throughout Scotland. Signum Circuits, a major employer in Selkirk and Galashiels, will put its 300-strong work-force on short time at the end of the week. Ernie Jamieson, the company's managing director, said that

"the situation is so fluid that no guarantees can be given on the ability of the firm to survive a sharp downturn".

Elsewhere on the front page, we read that at Sykes Europe, another electronics firm in Galashiels, 70 to 80 of the 240 workers may be made redundant this week.

Andy Kerr (Labour, East Kilbride)

Those problems are international and do not affect only the Borders.

Christine Grahame (Scottish National Party, South of Scotland)

I accept that there are problems to do with the electronics industry throughout Scotland, but the problems in the Borders compound the problems that are faced by an economy that has always been vulnerable.

To regenerate an economy, certain structures need to be put in place. Suitable roads are needed, as are rail connections and telecommunications. I wanted to ask Tavish Scott about ADSL provision, as I understand that capital funding cannot be used to set that up and there is none in the Borders, which means that telecommunications in that part of Scotland is only slightly removed from tin cans with a bit of string. As for roads, the A68, the major artery to the centre of the Borders, has only two crawler lanes and was impassable for four days this winter because of the weather. How can such a road be said to connect the Borders to anything?

Ian Jenkins (Liberal Democrat, Tweeddale, Ettrick and Lauderdale)

Christine Grahame is good at talking down the Borders, but let us hear her talking it up.

Christine Grahame (Scottish National Party, South of Scotland)

Ian Jenkins should watch what he says. After 30 years of Liberal Democrat representation, the Borders has no railway, no proper roads and a failing economy that is not being invested in. I have never heard any member of his party campaigning on those points in all the years that I have been campaigning in the area. I am not talking down the Borders; I am telling the truth. It is time somebody did. Those are the problems that the area faces. I certainly intend to raise the temperature of this debate as I am fed up talking mince in this chamber.

John Home Robertson (Labour, East Lothian)

Will the SNP ensure that the weather gets better?

Christine Grahame (Scottish National Party, South of Scotland)

I am not giving way. I am nearly at the end of my time.

George Reid (Scottish National Party, Mid Scotland and Fife)

You are not nearly at the end; you are at the end. Wind up, please.

Christine Grahame (Scottish National Party, South of Scotland)

Tarmac, trains and telecommunications. That is what the Scottish Borders needs and the small amount of structural funding that is being given will not deliver anything in the area.

Ian Jenkins (Liberal Democrat, Tweeddale, Ettrick and Lauderdale)

Would it not be nice to hear Christine Grahame welcoming some good news for a change? Of course there is bad news in the Borders and of course the area needs some support, but Christine Grahame is rubbishing the news of support that we are hearing today.

Kenneth Gibson (Scottish National Party, Glasgow)

Will the member give way?

Ian Jenkins (Liberal Democrat, Tweeddale, Ettrick and Lauderdale)

No.

Members are well aware of the problems that the Borders faces. There is no doubt that all our major economic sectors are facing difficulties. The textile industry is restructuring and faces difficulties in relation to the cashmere export trade. As has been said, the electronics industry is in a volatile state worldwide. Signum Circuits, which was championed by Christine Grahame at one stage, is now in difficulties, not because of a fault with the company but because of world changes. Tourism and farming have been in difficulty and the foot-and-mouth outbreak is making the situation worse. I accept that we need improvements in transport and communications infrastructures.

Let me turn to the good news, however. Following the Viasystems case, all the relevant agencies and the Scottish Executive recognised the urgency of the situation and addressed the problem by creating an economic working party that led to a highly focused economic forum that implemented the new ways recovery strategy. Since then, every agency in the Borders has been working together in an attempt to maximise the access to European funding. My Westminster colleagues Archy Kirkwood and Michael Moore played a prominent role in that attempt.

As our objective 5b funding came to a close, we made strenuous efforts to secure assisted area status, which the Borders lost in the 1980s. The objective 5b funding had allowed various projects to come to fruition, including the preparation of Claridge Mill in Selkirk, which is now to be occupied as a call centre with the promise of up to 200 jobs and the land of creativity project that assisted the tourism industry by placing an emphasis on cultural activity and cultural events. However, it was the achievement of assisted area status that gave us the most recent and valuable boost to the excellent work of the economic forum, which, in spite of some of the criticisms that Christine Grahame has levelled at that body in the past, has been ably led by Scottish Borders Council convener, Drew Tulley, and the Scottish Enterprise Borders chief executive, Jim McFarlane.

Euan Robson and I, together with our Westminster colleagues, have worked with the south of Scotland partnership to prepare bids focusing on the criteria to win as much support as possible. That is why, today, the south of Scotland is benefiting from the first announcements of structural funding. We got our bids in early and were well prepared.

I am delighted that those preparations have come to fruition in the ministerial announcements that are being made today. We hope to hear more detail of the announcements that will help us across the south of Scotland. I would particularly welcome support for the work of Scottish Enterprise Borders and the local tourist board. We need real boosts at a time of real trouble.

I understand that almost £6.5 million is to be invested in the south of Scotland and I know that Scottish Enterprise Borders has sought funding for a company support programme, new market development and a property funding initiative as well as for projects supporting innovation in technology and e-business. Those would certainly help to modernise the business infrastructure that we clearly need. Marketing and promotion initiatives are being undertaken by the Scottish Borders Tourist Board, which will be extraordinarily valuable under the current circumstances.

We have heard positive announcements for the Borders and good news for Scotland. I look forward to finding out whether funding has been granted for the Eastgate arts centre in Peebles, close to my home place. That would do great things for the community and for tourism.

On a general note, it is unfortunate, as Christine Grahame said, that the criteria for funding do not allow investment in physical infrastructure, as they did before. There is a problem with the soft infrastructure, with communications. I hope that, in its future plans for regional development, the Scottish Executive will recognise that as an important element for the regeneration of the whole of the south of Scotland, and for the Borders in particular.

Margaret Ewing (Scottish National Party, Moray)

I wish to concentrate on the important issue of the European social fund, which can be accessed through structural funds. In response to an intervention, the minister said that he was satisfied that the bureaucracy involved was not disadvantageous to the voluntary sector. It will not surprise him—he is not in the chamber anyway—to realise that I disagree with him on that issue. I found his response extremely complacent, particularly as the Executive, in its various guises, goes round the whole of Scotland talking about social justice, social inclusion and everything that is being done to ensure that no section of our society is losing out.

Voluntary organisations are a vibrant, vital part of our communities. They provide support to the most vulnerable people and provide work for carers. Accessing European social funds is a complex procedure, however. I am sure that Mr Peacock will be aware that Moray Council, through its European unit, has helped more than 200 voluntary organisations access roughly £250,000 of ESF, which has been greatly appreciated by the organisations involved. Now, however, the situation is becoming even more difficult, and Moray Council is facing complexities. Onerous administrative burdens are being placed on committed, caring people.

For the benefit of fellow MSPs who perhaps do not understand the realities of this, I will highlight what has happened with regard to the new ESF regulations that the Executive has brought in. In the past, voluntary organisations that applied for social funding had to complete two two-page interim claim forms and, at the end of the financial year, one 13-page final claim form. Under the new programme that was introduced this month, every project has to produce four pages with 22 statistics. That has to be updated on a quarterly basis. Thereafter, organisations have only 20 working days—after that quarterly due date—to submit a 10-page progress report and a 19-page claim form. Otherwise, they will lose everything and have to repay any of the moneys that may already have been paid out.

I point out to Mr Peacock that those new procedures were introduced to this vital section of our community without consultation with voluntary organisations, and with no impact assessment.

I want to be constructive in this debate, and have two small recommendations that I hope the Executive will consider. Many of the small—they are small, but very important in small rural communities—organisations that I am talking about faithfully submitted their applications at the end of 1999 or early in 2000. They had no prior knowledge of the new regulations that were to be introduced. As a result, the statistics that they had were kept only as summaries. The Scottish Executive has imposed a deadline of April 2001—this month—for the individual beneficiary statistics to be provided. Otherwise, the organisations face decommitment, which, I think, would be wrong.

Could that deadline be reviewed by the Executive, so that a lifeline could be given to voluntary organisations? That would enable them to backtrack on their records in order to access structural funding.

We all accept the need to monitor carefully the disbursement of funds from the European Union, and the need for a level playing field among all EU member states. However, the detail now being required is out of proportion to the moneys that are received. Either the Executive could propose detailed annual monitoring, which would, as previously, suffice, or it could impose a de minimis rule. A level of about £50,000 could be set, over which annual returns would be required.

I hope that those are constructive suggestions for the voluntary sector, and that the minister will respond positively.

Rhoda Grant (Labour, Highlands and Islands)

Many of the issues already raised in this debate have been technical. Rather than concentrate on the big picture, I want to examine the lasting effects that the funds are having on the ground. We should bear in mind the fact that the funds are given to provide sustainable development and to promote equal opportunities.

Last year, I visited North Highland College. Its staff showed me their jobs-for-all project, which preceded European funding. The project was set up to help people with disabilities and learning difficulties get back to work. The college brings in work from local companies to its on-site factory. The clients then become workers. They are paid a wage and work in a very sheltered environment. When they have built up their skills and confidence, they move to the employer's premises. They have a buddy with them, who ensures that they are not overwhelmed by the experience. When their confidence builds and they are happy with their working environment, their buddy leaves, and, employed by the company, they are left to get on with the job.

Bearing in mind the fact that many of those people have never had jobs before, the difference that is made is enormous. Not only do they gain employment; they gain confidence and new skills, and make friendships. The challenges that are set to the people in that situation mean that their self-development is enhanced. Some people have said that they are hardly recognisable as the folk who joined the project initially.

Structural funds also encourage equal opportunities in other ways, particularly with regard to the contribution of women in the workplace. In rural areas, it is important to consider that, given the male domination of traditional industries. Structural funds are being used to get women back to work after career breaks, when they are looking after young children or elderly relatives. The funding is used to give women choices, to introduce them to new skills, to give them assertiveness training and to make them aware of the fields that they can enter, showing them that they do not necessarily have to follow careers that are traditional for women, as most such jobs are low paid in the Highlands.

Work is also undertaken to make employers consider their working practices, not just in making them aware of the equal opportunities legislation, but in making them aware that they can change practices in order to allow women to continue working when they have dependants. That can lead to employers examining the question of working hours. Are the present working patterns necessary?

Employers are also encouraged to consider crèche provision for their employees, and ways in which they can allow women to progress their careers and meet their caring commitments. Child care training is given a priority. It is all very well to provide jobs for women, but if there are no facilities for child care, the women are pushed out of the working environment. Society has moved far enough to understand that women want to be able to look after children and relatives, but also want a satisfying career. We know that their contribution is not only necessary, but desirable.

This debate has given us a chance to highlight such issues: to show how the money makes a real difference to individuals in the Highlands and Islands. The funding there would be greatly reduced if we followed the SNP's calls for Inverness to be excluded. I am very happy that the Government fought for the additional funding, which has made a huge difference to people in the Highlands and Islands.

Ben Wallace (Conservative, North East Scotland)

I will start by picking up some points made by Hugh Henry. European structural funds have been a positive contribution from the EU Commission—not just from the member states or regional Governments—towards developing and improving certain areas of Scotland. It is important that ESF is not used by the nationalists to make all sorts of spurious arguments by way of putting forward nationalism and trying to cause friction. That detracts from the good things that structural funds have brought to Scotland and the United Kingdom over their history. We should therefore deal first with the points that Kenny Gibson made.

On objective 1, it is perfectly fair to say that Scotland is very lucky to have some transitional objective 1 areas. Our gross domestic product is well above the level at which we would qualify for objective 1 funding. Credit is due to the Government that secured the transitional period. Winnie Ewing will say that we had a right to transitional funding. That is true, as when an area loses objective status, it gets a transitional period by right. However, it is also true that there have been tremendous pressures on our EU budget because it is fixed until 2006. Given the new demands that enlargement brings—

Winnie Ewing (Scottish National Party, Highlands and Islands)

It was set in tablets of stone that objective 1 areas that lost that status would receive a fixed amount of transitional funding. It was claimed that the securing of transitional funding was a great result of Mr Blair's negotiation, but that is utter nonsense.

Ben Wallace (Conservative, North East Scotland)

I said that there was a right to transitional funding. However, funding was given in excess of the original objective 1 level.

Kenny Gibson suggested that we should gerrymander the borders of the Highlands and Islands so that the rules change and we qualify for structural funds. I do not think that we want to go down that route, or we will start telling people in Inverness that they live in Kent.

Kenneth Gibson (Scottish National Party, Glasgow)

Would Ben Wallace rather that objective 1 money comes to Scotland or that it goes to other parts of the European Union?

Ben Wallace (Conservative, North East Scotland)

I would like that money to go where it is fair that it should go. I do not want to deprive people of money in other parts of Europe just because I am Scottish. If Scotland does not deserve it, it should not get it.

Colin Campbell (Scottish National Party, West of Scotland)

Will the member give way?

Ben Wallace (Conservative, North East Scotland)

No.

I will move on to additionality. Kenny Gibson obviously failed to read the committee's report. As Hugh Henry said, Scotland is receiving an appropriate share of the structural funds that are allocated to the UK by the EU.

Kenneth Gibson (Scottish National Party, Glasgow)

What does Ben Wallace understand by the term additionality?

Ben Wallace (Conservative, North East Scotland)

I put that question to the director general of regional policy. He said that he was quite happy that Scotland follows the spirit of additionality to the full. It is for the EU, which is the referee on this matter, to decide, and it is perfectly happy. The Welsh academics who were wheeled out by the SNP forgot to ask the EU what its interpretation of additionality was. They pulled out a 1986 upgraded black-and-white rule on additionality. Obviously, when it was investigated, the argument fell apart as if it was made out of balsa wood.

It is a matter of regret that the Secretary of State for Scotland could not come before the committee. I do not take the view that it has to be the Chancellor of the Exchequer who gives evidence. If the secretary of state does not play a liaison role with the UK Government, future relations are not helped. It is important that Britain is a team, that we work together and that we get information. I press the ministers to ensure that that happens in future. The European Committee clerks and I went down to the House of Commons to see the Scottish Affairs Committee in action. It was important that we did that. There were not too many SNP members on the committee—they try to have the best of both worlds.

The civil servants have been very co-operative with us. Heather Koronka, who is now the chief executive of the Scottish ESF objective 3 programme management executive, has always been helpful to members who have asked for details on behalf of constituents. Jack McConnell was helpful and I thank him for his help. I am agreeing a bit much with the Executive—I feel a bit like a Liberal Democrat, but I will have a sit-down afterwards. However, I am agreeing on a point of principle, so I suppose that I will be all right.

The LEADER + programme is very important. The LEADER programme is important to many rural areas, such as Aberdeenshire. The lack of time and the consultation that the committee had on that should have been addressed. I urge the minister to give us a clear directive for the future.

In summing up, I will deal with what Christine Grahame said. The EU sets the rules. The Borders has problems and assisted areas schemes will help to solve them. However, will an independent Scotland not have foot-and-mouth disease or difficult weather? EU money will not solve the electronics glut in the world. The idea that, if we give a bit more EU money, everything will be all right is mistaken.

We support the motion and welcome the use of structural funds.

Alex Neil (Scottish National Party, Central Scotland)

Ben Wallace has missed the point. The point is that the economic record of an independent Scotland would be such that we would not rely on subsidies from anywhere. Since 1963, when figures were first kept, the long-term growth of the Scottish economy has averaged 2.1 per cent, which is 50 per cent below the UK average. That is an indication of the economic mismanagement under successive unionist Governments, whether they were Tory unionist or Labour unionist.

Mike Rumbles (Liberal Democrat, West Aberdeenshire and Kincardine)

What about Liberal unionist?

Alex Neil (Scottish National Party, Central Scotland)

I will leave the kindergarten stuff to the Liberal Democrats.

I will deal with some specific issues such as bureaucracy. Margaret Ewing articulately outlined the problems that are faced by the voluntary sector because of the bureaucracy of the programmes. This morning, I met the economic development committee of the Convention of Scottish Local Authorities and was told that the level of bureaucracy is far higher in the new programmes than it was in the old ones. Although it is now April 2001, we are talking about a programme that runs from 2000 to 2006. Fifteen months after the start of the programme, no cheques have been written because of the bureaucracy—not at the European Union level, but at the Scottish Executive and UK Government levels.

An example of the problems that are caused by bureaucracy is the LEADER + programme in Dumfries and Galloway. The LEADER programme is one of the best ever European Community programmes and it has done an enormous amount. I know from my experience that it has been of enormous benefit to local authority and local enterprise company activity in Dumfries and Galloway in particular. However, although LEADER + was supposed to have completed applications by the end of last month, the action groups are not even up and running, and although the deadline for submitting applications and receiving approvals is supposed to be the end of this month, no applications have been made. I would like the minister to say why not, particularly given that Dumfries and Galloway is the epicentre of the rural crisis in Scotland.

I will widen the issues. The problems that we will face in 2006 and beyond as a result of the planned expansion of the European Union have been mentioned. I hope that the minister will listen to the points that I make and do something about them.

We do not need to wait until 2006 to feel the effects of the planned expansion of the European Union. Politically, I am wholly in favour of the eastern European countries' entry to the EU. The bigger political questions demand that that takes place. However, we are starting to lose some of our industrial base to eastern European countries. The Vesuvius-Premier Refractories brickworks in Falkirk, Volvo in Irvine and Compaq in Erskine are going to Poland and the Czech Republic. Those moves are perfectly understandable from the companies' point of view, as they will get bigger grants, cheaper labour and access to the European market, but it is the Executive's responsibility to look at what is happening as a political issue that needs to be addressed. It is a challenge to the whole of Scotland.

Hugh Aitken, the chairman of Electronics Scotland, has said that Compaq is the tip of the iceberg and that we could quickly lose another 4 per cent or 5 per cent of our electronics sector. I ask the minister, in summing up, to address that issue, tell us about LEADER + and say what he plans to do after 2006. At the current rate, it will take him until then to realise what is happening and write those plans.

George Lyon (Liberal Democrat, Argyll and Bute)

I will deal specifically with the Highlands and Islands, but first I will address the criticism in Kenny Gibson's amendment that the Scottish Office failed to redraw the regional map to secure objective 1 status. We all know that that meant removing Inverness from the map in the Highlands and Islands. I do not remember a huge campaign to have Inverness removed from that map. This is an example of the SNP wanting to have it both ways. During the debate on the redrawing of the regional selective assistance map, I distinctly remember the SNP campaigning vigorously to ensure that Inverness was included in that map. The SNP cannot have it both ways.

Winnie Ewing (Scottish National Party, Highlands and Islands)

I was somewhat involved in that issue, and I thought it important to take account of the views of all the local authorities in the Highlands and Islands. They may have wanted to take Inverness out of the map, but when it came to the bitter end, they were not prepared to say so publicly. After the event, the Western Isles Council expressed the view that it was sorry that it had not campaigned otherwise, but I took account of the views of all local authorities.

George Lyon (Liberal Democrat, Argyll and Bute)

If Dr Ewing is arguing that the map should have been redrawn, and the obvious choice was the removal of Inverness—given its GDP—surely she should have stood up and argued that point forcibly, particularly if she wanted objective 1 status for the Highlands and Islands to continue. The important point is that the SNP cannot have it both ways.

Christine Grahame substantiated the point that was made by my colleague, Tavish Scott, as she devoted her whole speech to talking down the Borders. Indeed, she portrayed that area as a war zone where there are no roads, no railways and no jobs.

Christine Grahame (Scottish National Party, South of Scotland)

Rubbish.

George Lyon (Liberal Democrat, Argyll and Bute)

Speeches must contain some balance, for goodness' sake.

Christine Grahame (Scottish National Party, South of Scotland)

I was talking about the reality.

George Lyon (Liberal Democrat, Argyll and Bute)

Allegedly, Christine Grahame represents a particular area, but if she wishes to do so properly, she should take a balanced approach to how she represents that area to the wider world. That is only—

Christine Grahame (Scottish National Party, South of Scotland)

Will the member give way?

George Lyon (Liberal Democrat, Argyll and Bute)

Okay.

Christine Grahame (Scottish National Party, South of Scotland)

Does George Lyon deny that the Scottish Borders has the lowest wages in Scotland, at £50 less than the Scottish average? Does he deny what I read in the Southern Reporter about the imminent redundancies, the downturn in farming and the general exodus of young people from the Scottish Borders? That is the reality test, which some Liberal Democrats should take.

George Lyon (Liberal Democrat, Argyll and Bute)

Christine Grahame has just demonstrated that she is addicted to talking the area down—she cannot do anything but talk it down. Every time she opens her mouth, out it comes.

Ben Wallace gave a good speech that was very pro-Executive. In fact, I wonder whether his speech might endanger the good alliance between our colleagues on the Tory and SNP benches.

My good friend Alex Neil, who is the convener of the Enterprise and Lifelong Learning Committee, gave a constructive speech, as usual. He highlighted bureaucracy and made an important point when he alluded to the benefits of the LEADER programme. Many members who have worked with the enterprise companies and with the LEADER programme know how good that programme is.

Hugh Henry reminded Kenny Gibson—who had not read the European Committee's report in any great detail, if at all—about the facts in relation to additionality.

Kenneth Gibson (Scottish National Party, Glasgow)

What evidence does George Lyon have that I did not read that report?

George Lyon (Liberal Democrat, Argyll and Bute)

I am afraid that my evidence is the contents of Kenny Gibson's speech.

It is important to recognise that the objective 1 programme in the Highlands and Islands delivered many benefits to that part of the country. It delivered on a range of big infrastructure projects and on community projects, such as the five community halls in my constituency, which were funded out of the ERDF. Without that European help, those community halls would never have been built.

The European objective 1 money made a huge and significant difference to the Highlands and Islands, but a great deal more must still be done. Statistics for Argyll and Bute show that the area's GDP level is about 72 per cent of the Scottish average, and the same applies to the Western Isles and to Skye and Kyle of Lochalsh. The big challenge is to lift those areas out of the economic recession that they face. The £200 million of transitional relief money will aid that process in the Highlands, and that money must be used over the next six years to build on the achievements of the objective 1 funding programme.

A number of members made the point that the most important issue to which ministers must turn their minds is that of what we should do after 2006. It is clear that many parts of the Highlands and Islands will benefit over the next six years from the investment that will be made. However, I do not foresee that, in the next six years, there will be such a dramatic improvement in areas that have a GDP level of, for example, 72 per cent of the national average that they will not need further assistance. I ask ministers to concentrate on where we will go after 2006—that is the big challenge that will face the Scottish Executive over the next year or two.

David Davidson (Conservative, North East Scotland)

We have had an interesting debate and, despite the early banter, a number of common themes came across. The question is whether everybody will buy into those themes.

Members on the Conservative benches are particularly concerned about the focus on sustainable economic opportunity and development, for which structural funds should be used wherever possible. We all agree that mass unemployment in particular areas is corrosive to society and damaging to the individual. It also lowers our skills base, and it is important that our skills base is such that people want to come here and invest. The skills base should also give individuals the opportunity to go further.

During the early part of the debate, the minister was caught out by Christine Grahame's question, which was about transparency. We all accept that the Executive and the UK Government must be totally honest about where money is coming from and how it is labelled. When I worked in England, I recall that I received money from Europe for an economic development scheme. We had to put a big sign on the wall that stated clearly where our funding had come from. The Government should take that health warning; if the source of funding is stated clearly, people might understand what that funding is meant to be for.

As usual, Kenny Gibson mentioned additionality, which was dealt with rather well by my colleague, Ben Wallace, and by Hugh Henry. Kenny Gibson also made a good point about the Scottish Executive's problems with handling ESF moneys. Members of all parties have made the point well that too much bureaucracy is involved, particularly in relation to the gold-plating of regulations and detail at the Scottish end. The important point is that people should be able to access the funds and to commit them speedily to the areas where they can do most good.

Irene Oldfather began her speech with a worrying comment about redistribution, but I realised thereafter where her speech was going. I agree with her about the displacement of jobs. We must address that matter now.

My colleague Lord James Douglas-Hamilton was absolutely right to highlight transparency, but the major point in his speech was that the economic circumstances in Scotland are changing now. There are problems with foot-and-mouth disease, with the fisheries and with the changing pattern of industry. There might also be a problem with our competitive position, which I am sure will not be assisted if taxes are raised. Where are we going? That is the crux of the issue. George Lyon and other members—including me—talked about the need to review where we are going. After the summer recess, will the minister lodge a motion for debate in the chamber on the Executive's thinking on the future? That will give the Executive two or three months to work up its plans and conduct its investigations, but we must have a picture of the Executive's plans for the future. That is the clear message from members.

Christine Grahame made an impassioned plea, to which Ian Jenkins responded defensively, to say the least. The Liberals complained about the fact that the changes that were made in the past disadvantaged certain areas, but we still do not know what they want to change in future. Despite members challenging the Liberals about that today, we heard nothing from them.

Other members spoke about the role of transitional funding, which is important. While successive Governments have done reasonably well, we always want more. It is true to say that those funds are meant to balance needs throughout the EU. On that basis, it is important that the Administration produces policies at home that are focused not only on depending on those funds, but on ensuring that additional support is keyed in from our budget, rather than relying on the European budget.

Kenneth Gibson (Scottish National Party, Glasgow)

Mr Davidson's colleague, Ben Wallace, said that Scotland was lucky to receive structural funds.

Ben Wallace (Conservative, North East Scotland)

: I referred to objective 1 funds.

Kenneth Gibson (Scottish National Party, Glasgow)

However, both Mr Davidson and Lord James indicated that Scotland received more structural funds under the Conservatives. Who is right? Should we receive nothing, as Ben Wallace seemed to suggest, or should we receive more, as Mr Davidson and Lord James seem to think?

David Davidson (Conservative, North East Scotland)

Ben Wallace suggested merely that a sense of fairness must come into play if we become better off, in European terms, and if the cake that is being divided is European. Today, the Conservatives are highlighting the negative developments in the Scottish economy and in Scotland's employment prospects, which mean that we must now look to the future.

Other countries, including Spain, are seeking to have the rules drawn up well in advance of 2006. Indeed, they are doing so after the next budget. We need to conduct that exercise in the Scottish Parliament. That is why I called for a debate soon after the summer recess.

We also need, when it comes to dealing with Europe and at a time when the country is under such great pressure, to seek areas of common approach. That would allow our representatives to negotiate sensibly on our behalf. If that common sense of bond and purpose exists, Scotland will be well represented when it comes to the next negotiations.

Adam Ingram (Scottish National Party, South of Scotland)

Given the unionist alliance that we see before us today, I find myself summing up for the only official Opposition. Debates on the subject of European structural funds should be useful, not least by holding the Executive to account in its role as the managing authority of the structural funds. They are worth around £1 billion over the next six years, so their application should have a significant and positive economic impact. However, notwithstanding this morning's announcement on the programme for the south of Scotland, I am puzzled as to the timing of the debate, because we have not yet heard the Executive's announcement of approved objective 2 projects.

To some extent, the debate has been informed by European Committee reports. I hope that the Executive has taken the conclusions of that committee's report on the application and project appraisal process for European structural funds on board, and that the Executive will implement the committee's recommendations. It should not be too much to ask the Executive—which is committed to a modernising government agenda—to streamline bureaucracy and iron out the wrinkles in IT systems. Margaret Ewing and Alex Neil underlined the importance of that issue.

The European Committee also made pertinent recommendations on improvements to the project appraisal and selection processes, which would ensure that there is a proper balance between programme priorities and geographical areas. It is unacceptable that some organisations continue to be in the position where, because decisions on their project applications are still pending, they may have to issue 90-day redundancy notices to staff. Hugh Henry and Margaret Ewing highlighted continuing problems for the voluntary sector and made constructive suggestions for change.

I hope that the Deputy Minister for Finance and Local Government will include an assurance in his summing-up speech that he will have an administrative system in place for the next round of applications that is, in his own words,

"robust, transparent and has the support of participants in the process".

We have no great quarrel with the Executive over its interpretation of community priorities, as set out in its priorities for development strategy. The key to economic and social cohesion in Scotland is the development of indigenous small and medium enterprises in order to regenerate local economies that are in decline. In particular, SMEs can reverse the decline in the traditional industries, both urban and rural.

We can all agree that sustainable development is our objective. Promoting equal opportunities and social justice will also unlock human and economic potential which, in the past, has all too often not been realised. In a similar vein, we support an operational strategy that emphasises continuity and durability for programme and project initiatives. That will mean that when enlargement comes—with the reduction in funds—most projects can be sustained well beyond 2006 without recourse to external support. That has been a theme of the debate. I look forward to the minister's comments on the situation post-2006.

Where the SNP departs from the Executive's viewpoint is in the Executive's craven dependence on the UK Government to look after Scotland's interests. There is strong evidence to suggest that the UK Treasury filched European funds, which should have come to Scotland in the past.

Ben Wallace (Conservative, North East Scotland)

Will the member give way?

Adam Ingram (Scottish National Party, South of Scotland)

No, I will finish the point that I am making. Following devolution, the arrival of an assigned budget, with a European funding line that was greater than the amount of cash that we received from Europe, appears to be the result of accident rather than design. That accident could, of course, be the loss of objective 1 status for the Highlands and Islands. On reflection, that was not so much an accident as incompetence. My colleague, Kenny Gibson, said that and our amendment highlights it.

Incompetence or negligence might also be a charge to lay at the Executive's door on consideration of its failure to develop other programmes. David Davidson raised the issue of FIFG. We have still to hear a response from the Executive on that.

I want to highlight the community initiative for rural development, also known as LEADER +. Community initiatives form a relatively small proportion of structural funds, but LEADER + is worth £17 million to £18 million over the next six years. My understanding is that Scotland is well behind the rest of the UK and that local action groups that are responsible for the design and implementation of development strategies for their areas have not yet been formed. The Scottish programme should have been with the European Commission in November 2000 and project proposals for the local action groups should have been lodged last month. Parliament is entitled to an explanation today from the minister for the unconscionable delays in applying for LEADER + funding.

Rural communities such as Dumfries and Galloway have benefited greatly from predecessor programmes. I should not need to remind the minister of how valuable LEADER + projects would be in dealing with the economic crisis in rural Scotland, and in Dumfries and Galloway in particular. The previous LEADER programme in Dumfries and Galloway led to new investment of £11.6 million in the local economy. Several hundred new jobs in tourism were created and farm diversification projects featured heavily.

I ask the deputy minister to give prominence to the issue in his closing remarks. I urge him to come clean on the matter and to resist the temptation to treat Parliament in the dismissive manner of the UK's Chancellor of the Exchequer.

Peter Peacock (Labour, Highlands and Islands)

The debate is on an important matter that benefits Scotland greatly. I am sorry that the SNP, in its normal way, sought to reduce the subject with a display of unremitting mediocrity. However, many good points were made by other members and I will seek to answer them.

Scotland has, in the Executive, a Government that is committed to playing its full part in Europe with our UK colleagues. As Hugh Henry, Irene Oldfather and others mentioned, the development of the European Union since the second world war has been hugely significant. Some would argue that that union has been largely responsible for maintaining peace throughout Europe. As Hugh Henry said, we should always remember that Europe is about more than Scotland receiving structural funds. Europe is about a much bigger movement; it is about securing peace and new markets for our products and living in harmony together, for example. We should always keep that in the forefront of our minds.

With the development of the EU, a single market has developed across Europe. That has widened the marketplace within which we, as a nation within Europe, can trade goods. The maintenance of fair competition in Europe is an integral part of that marketplace. That development has contributed to the provision of more job opportunities for Scotland than it would otherwise have had.

As I said, we have also been significant beneficiaries of European structural funds. Those funds have offered—and they will continue to offer—real benefits to Scotland. They develop our physical infrastructure and they develop our people, by improving their skills and ensuring that they are more employable. Those funds help people back into the jobs market, add to their personal wealth and to the wealth and well-being of their communities. Irene Oldfather referred to the fact that structural funds are—above all—about European cohesion and tackling disparities within and between the regions of Europe.

I come from the Highlands and Islands and therefore I fully appreciate the impact that structural funds can have on an area. Part of the reason that the Highlands is in the midst of a renaissance in its fortunes is the investment of European structural funds. The evidence is all around in, for example, better roads, better bridges, better piers and jetties, and better airports and airstrips. People have more skills, there are more employable people, there is industrial development and land is being exploited for the first time. There are also better tourism facilities.

Kenneth Gibson (Scottish National Party, Glasgow)

Will the member take an intervention?

Peter Peacock (Labour, Highlands and Islands)

In a moment.

As a result, population drift from the Highlands and Islands has halted and people have greater confidence. The prospects are better and GDP continues to grow.

That is an excellent illustration of what structural funds can do for an area of Scotland that was once plagued by difficulties and which is still facing challenges, but is now more capable than ever of holding its own in Europe. Such benefits, as Hugh Henry indicated, extend throughout Scotland through objective 2 and 3 programmes, and through various community initiatives.

Kenneth Gibson (Scottish National Party, Glasgow)

Will Mr Peacock accept some responsibility for the loss of objective 1 status in the Highlands and Islands, given that he was the leader of Highland Council at the time?

Peter Peacock (Labour, Highlands and Islands)

I am delighted that Mr Gibson raised that point. I was about to come to a most extraordinary accusation by the SNP that the Highlands were let down—or betrayed—by the results of the last round of negotiations. The plain fact of the matter is that the Highlands and Islands have become too prosperous to fall into the category of the poorest parts of Europe. That is not something to complain about, but to celebrate. An area of Scotland that for generations was in decline is now in the midst of a renaissance in its fortunes—partly because of structural funds.

The SNP detests success stories in Scotland. SNP members require to talk down Scotland in order to talk up their own prospects. That is the only basis for their survival. Good news for Scotland is, of course, bad news for the SNP and now its members want to talk down the Highlands and Islands. We heard an extraordinary display from Christine Grahame, who talked down the Borders. We announced more resources for the Borders and money is going into the future of the rail industry there, but we still hear totally negative approaches.

Winnie Ewing (Scottish National Party, Highlands and Islands)

Will the minister think back to the negotiations for the Highlands and Islands to retain objective 1 status? We were acknowledged, by a sympathetic Scottish Office, to be the only case in Europe that was on the borderline for the qualifying figure. Is not it the case that we had no competitors? The Scottish Office was optimistic and we had no competitors because the Scandinavians did a deal on entry. Why then was it hailed as a great victory when the Government could not deliver objective 1 status for us?

Peter Peacock (Labour, Highlands and Islands)

The plain fact of the matter is that the Highlands and Islands did not qualify for objective 1 status because the area's GDP was above the threshold. That is a matter not for regret, but for celebration. Despite the fact that we did not qualify for objective 1 status, the Prime Minister—Ben Wallace graciously acknowledged this—was able to negotiate a special transitional arrangement for the Highlands and Islands, which was worth £210 million. That is almost as much as we would have got had objective 1 status been secured.

Dr Ewing made the point that there was a right to transitional funding. In fact, when negotiations opened there was no such right and it was due largely to the Convention of Scottish Local Authorities—and people such as Hugh Henry and others who worked for COSLA at that time—and the representations that it made to the European Union about transition, that that right was won by the UK. As a consequence, the Highlands and Islands benefited. It is also the case that Scotland's being part of the UK gave it strength in the negotiations and secured that deal. Had we not been a part of the UK, it would have been almost impossible to secure that deal. That is something that the SNP wants—conveniently—to forget.

Over time, transitional funding is a good deal for the Highlands and Islands and for Scotland. The SNP's answer was to say, "Fiddle the maps." Every avenue was explored. The plain fact of the matter is that the NUTS level 2 territorial unit referred to the whole Highlands and Islands. Any area of Europe could take out its most prosperous city and try to claim that the rest of it fell below the threshold. The European Union simply would not wear that approach.

Kenneth Gibson (Scottish National Party, Glasgow)

Why was that accepted for Ireland and for Wales?

Peter Peacock (Labour, Highlands and Islands)

Mr Gibson misunderstands.

Ireland has lost objective 1 status relative to its position prior to the previous round of negotiations. The Welsh position is a result of mandatory statistical reviews, in which the European Union accepted its case, but not Scotland's. As to Finland and Sweden, they have objective 1 status as a result of their terms of accession to the union. All those matters are fully catalogued and understood and, as usual, instead of welcoming the news the SNP is whingeing and moaning and girning and greeting about the fact that the Highlands is getting that extra aid.

Ben Wallace (Conservative, North East Scotland)

An independent Scotland would have seven votes on the ministerial council. The largest recipients of objective 1 funding—the UK, Spain and Italy—have 29 votes. Does the minister agree that they simply would not listen to Scotland in any negotiations?

Peter Peacock (Labour, Highlands and Islands)

It is perfectly evident that, in the circumstances that I described, Scotland alone would simply not have had the clout that it did when the Prime Minister was able to secure the welcome deal for the Highlands and Islands.

There are several other points that I want to address in the time that is left to me. A number of members have mentioned the voluntary sector and have drawn attention to the role that that sector plays in spending the funds in ways that other parts of our society cannot, by tackling issues of social inclusion and so on. I recognise the real burden on a small organisation of applying for funds—to which Margaret Ewing referred—and that is why, in past European funding rounds, technical assistance has been available through the Scottish Council for Voluntary Organisations and other parts of the voluntary sector to help with the applications process. I am more than happy to look at the questions of bureaucracy that were raised. If the members who mentioned that matter will write to me, I will look at it in some detail. I am acutely conscious of the problems that are caused by delays in payments because of voluntary organisations' cash-flow problems. We are genuine in our desire to support the voluntary sector, and we will do anything that we reasonably can within the rules. I would be grateful for evidence from colleagues on that.

A significant issue of principle, raised by a number of speakers including Irene Oldfather, Lord James Douglas-Hamilton and Alex Neil, is the question of enlargement. It is a matter of principle and we support it, as members indicated. With enlargement, however, come challenges, such as the possibility of the displacement of jobs, which was mentioned by Irene Oldfather and Alex Neil. That is why it is important that, when we talk about future funds and structures in Europe, we do not talk only about structural funds. We must also talk about competition policy. That is why state aids rules—burdensome and troublesome though they can be at times—help to maintain a level playing field throughout the European Union on which we can all compete equally. It is important that we look at that, at employment law and at social policy in relation to both the future enlargement of Europe and those other matters.

Members also mentioned additionality. The European Committee, of which Hugh Henry is convener, has looked at that and has indicated that it is not seeking fundamental alteration to additionality. The European Union is entirely satisfied that what we do in Scotland meets the requirements of additionality. Scotland is held up by Europe as an exemplar of what ought to happen in relation to the deployment of those funds. In that context, it is simply wrong to suggest that Scotland loses out.

On future funds, members can be absolutely assured that the Executive will play a full part in the cohesion report discussions from now on. We must look more closely at how we target resources in future and at what happens when areas of Scotland are still facing difficulties and may decline in GDP terms. The LEADER programme is awaiting approval from Brussels. It is currently with the Commission and has been there for a number of weeks. We expect it to be cleared in a number of weeks' time so that we can make progress on it.

Within the wider context, members can depend on the Executive, with our UK partners, to fight Scotland's corner to ensure that we obtain whatever we can by way of structural funds. That will require us to think hard about the strategies that we deploy and to make some tough choices and decisions. Nonetheless, the Executive will continue to argue its corner: a strong Scotland, within a strong UK, within a strong Europe.

Foot-and-mouth Disease

David (None, Lothians)

The next item of business is a statement by Ross Finnie that will provide an update on the foot-and-mouth disease outbreak. Questions will be taken at the end of the statement, which will—I warn members—of necessity be quite long. We may well overrun our 12.30pm deadline for the close of this morning's business. I will make a judgment on that as we go. It would be helpful if, during the minister's statement, members who want to ask questions indicated that wish.

Ross Finnie (Liberal Democrat, West of Scotland)

I am grateful for this opportunity to bring the Parliament up to date on where we currently stand on foot-and-mouth disease. We are dealing with an evolving situation, with many challenges and complexities. For that reason, we have been filing bi-weekly reports on the situation with the Scottish Parliament information centre.

By the end of Wednesday, we had 126 confirmed cases of foot-and-mouth disease in Scotland. Cases are still concentrated in the Dumfries, Canonbie and Lockerbie area. Regrettably, there has been a spread to the west of the River Nith and to the east, up towards Newcastleton. Members are already aware, of course, of the pockets at Castle Douglas and Twynholm.

Before I turn to the action that we are taking to deal with the problem, I think it right that we should all acknowledge the human dimension to this outbreak. It is important that we are mindful of the anguish of those who are directly affected. We must be mindful of what many have been through and of what many, regrettably, may yet have to face.

This has been, and continues to be, a time of great distress for the farming community and all those affected in south-west Scotland. I am sure that we would all wish those communities to know that we want to do everything that we can to stamp out this disease as quickly as possible and to assist them in the weeks and months ahead.

No one should be in any doubt about the sheer scale of the task that faces us in seeking to control and eradicate this disease. It is a huge undertaking. For every new infected farm, the farms next to it need to be identified. Mapping work is essential to establish accurate farm-to-farm relationships. Farmers have to be contacted, valuers brought in and slaughter teams put at the ready. When slaughtering begins, it must be done as quickly and humanely as possible—a point that I will return to later. Then there is the huge task of removing and disposing of the carcases, often in very difficult circumstances. I pay tribute to those who are involved in the slaughter teams—including, of course, the Army, which has been given that unpleasant duty. Finally, the clean-up and the disinfection process have to be carried out expeditiously. That has to be done on every occasion that we embark on a cull.

Of course, with an operation of this magnitude, we have not got everything right and glitches have occurred. My officials and I are the first to admit that and we apologise for any distress that has been caused. However, I hope that members will understand that any such mistakes must be seen in the overall context of this huge and complex task. Our clear objective is to get the job done as quickly and efficiently as possible, with minimum distress to the farmers, their families and, indeed, the animals themselves.

Our disease control strategy in Scotland is driven by the science, by the epidemiology and by the day-to-day advice of our chief veterinary officer in Scotland. The strategy takes account of the particular situation in Scotland, our farming practices, the scale and pace of the disease, the resources available and the combined control structure that we have put in place. Our overall aim is to control, then eradicate the disease. Our strategy is to eliminate known pockets by slaughtering all susceptible species on confirmed infected farms. Our target is to do that within 24 hours of the confirmation of infection on the farm. I am pleased to report that, in most cases, we have been achieving that target. By doing so, we have been rapidly removing the source of infection and reducing the possibility of spread.

The second element of our strategy is to isolate pockets of infection by culling all susceptible species on farms next to infected farms. Our target for that is 48 hours from the original report. I regret that that target is not yet being achieved, because of logistical and other problems. However, it is vital that we do our utmost to achieve it. Failure could simply condemn farms further out from the original infected source. I understand the distress that being deemed to have an infected farm causes to individual farmers, but I urge them to co-operate fully with the policy to help us stop the spread of the disease.

The third strand of our strategy involves prioritising our effort. Priority is being given to halting the spread out from the heart of the infected area. We are concentrating on farms that are next to new cases of infection in outlying areas and on cases on the edge of the main concentrations of disease. Evidence to date suggests that that approach is making a considerable contribution. It is clear that disease spreads between such farms—through contact between animals, through the movement of people or vehicles, or through aerosol spread.

Once the perimeter of the outbreak has been secured, our intention will be to deal with the core of the infection, especially by removing sheep that are at the highest risk. With the resources that are now at our disposal, and with the Army playing a key role alongside the state veterinary service, we hope to speed up the whole exercise to try to get ahead of the disease and then defeat it.

A major constraint on the speed of our entire culling operation until very recently was the lack of disposal options for carcases. Initially, burial was not an option, in part because of the particular topography of Dumfries and Galloway and in part because of the imperative of ensuring that any burial was undertaken in a way that reduced environmental and health risks to an absolute minimum. We have therefore involved the Scottish Environment Protection Agency to ensure that the sites that have been chosen—including the Birkshaw site—fully meet the requirements. As regards the burial of cattle, let me assure members that any possible danger from BSE has been assessed by the Spongiform Encephalopathy Advisory Committee, by the Executive's chief medical officer and by SEPA. As a consequence, only cattle born after 1 August 1996 will be buried, in keeping with the advice that the Executive has received.

In recent days, there has been much comment on the role that vaccination might play in tackling the disease in Scotland. Opinion on the subject is divided. Some suggest that vaccination could speed up the process of bringing the disease under control; others suggest that the effectiveness of vaccination is questionable in certain circumstances. Vaccination may offer some advantages in the short term, but it could give rise to serious disadvantages in the longer run, especially for a country such as Scotland, which has a reputation for quality meat and depends hugely on exports for business.

Everything is being done to beat foot-and-mouth disease without recourse to vaccination. The Executive will not go down that route without very careful assessment of the facts and of the advice from Scottish veterinary experts. Let me assure the Parliament that any decision to go down the vaccination route in Scotland will be taken by Scottish ministers.

Although my priority is to do everything possible, using all the available resources at my disposal, to eradicate the disease, I also have a responsibility towards farming businesses outwith the infected areas. I am deeply conscious of the fact that movement restrictions—which are necessary to help with my overall strategy of preventing the spread of this insidious disease—are causing practical as well as welfare problems for those concerned. I am grateful to everyone for having abided by the movement rules and regulations since they were first introduced, despite the obvious difficulties and distress that that has caused.

Having reassessed the position and taken careful account of the views of my veterinary advisers, I have concluded that some relaxation on the movement restrictions is justified. The relaxation that I propose will be phased. First, movement restrictions on all the islands, and directly between the islands, in the provisionally free area will be relaxed from midnight on Friday. Remaining controls, with the exception of licensed movements to slaughter, will be via a general licence as opposed to individual licences as at present. That will allow much more freedom of movement on the islands, taking account of their virtually assured foot-and-mouth-free status. The special situation of movements to and from common grazings will also be catered for in the general licence.

From 16 April—provided that no difficulties emerge—we will consider giving more freedom of movement to animals that have been away-wintered on the mainland. We hope to allow them to return to the islands. That date—16 April—is important, because it is 21 days from the date on which we culled the last animals in the provisionally free area that had had contact. If we meet our conditions, the Crofters Commission supply bulls will be able to move to the islands from that date. I am sure that those arrangements will be welcomed by island communities.

For the remainder of the provisionally free area of Scotland—the area north of the Forth-Clyde line—I intend, from 16 April and subject to my conditions being met, to implement a general licence that will apply throughout the mainland provisionally free area. That will allow the movement of livestock for most purposes within the provisionally free area; it will not allow movements for welfare, slaughter or other purposes into the provisionally free area. The movement of livestock for slaughter outwith the provisionally free area will still have to be licensed, as at present.

The situation in the at-risk area in Scotland—the southern half of Scotland with the exclusion of the infected area—looks more hopeful than it did when I last addressed the Parliament. Nevertheless, caution is still advisable. From 16 April, I will review the situation and a regime allowing longer-distance movements will be introduced, providing that no disease emerges. That will free up movements considerably and, for example, allow animals to be moved to grass lets and hoggs to return to their breeding farms, provided that the breeding farms are in the at-risk area.

At this juncture, I do not propose to change the dividing line between the provisionally free area and the at-risk area, but I will keep that position under review. I will also keep under review the position of livestock markets and collection centres. Those matters have to be dealt with with some urgency, but livestock markets and collection centres are banned at the present time and I do not have sufficient evidence to change that position.

It is also my intention, in due course, to review the present policy that prohibits any animal movements from the at-risk area to the provisionally free area, even for slaughter. I am conscious that the ban is having an adverse effect on the slaughtering sector, but at this juncture it is vital to ensure that the provisionally free area has absolute protection.

Finally, on relaxation, I have decided to relax the ban on stalking for deer in the provisionally free areas. That will be welcomed by interests that are concerned by the damage that is caused by marauding deer. I will review the position in the at-risk area over the next fortnight.

I recognise that there are those who advocate the removal of all restrictions outwith the infected area. I do not believe that that is warranted at this stage, even in the provisionally free area. However, my policy is to remove restrictions as quickly as can be justified and I hope that I have demonstrated that the moves that I have announced today have been made in fulfilment of that policy.

I will now address the issue of access to the countryside. It is abundantly clear that a great range of economic activity in the Scottish countryside depends upon responsible access to the countryside. Given the pattern of disease, we know that if certain clear rules are followed by those who seek access to the countryside, outwith the infected areas most activities in most areas pose no risk of spreading the disease. We have, therefore, taken the lead in drawing up guidelines and ground rules, both for the assessment of risk on the ground and for the behaviour of those in the countryside. Where there is real risk of infection, let those seeking access stay clear. Where there is not, let those following "The Comeback Code" enjoy access to the countryside.

The Executive will continue to play its part. Tomorrow, we will meet all Scotland's local authorities to clarify any remaining issues and to help them move the process forward quickly, yet consistently, throughout Scotland. In addition to reviewing the local authorities' access decisions, we will ask them to convene local access forums representing all key interests, to ensure that they are all involved in examining the issues locally. In that way, all public and private land managers will have the opportunity to equip themselves fully to tackle access issues according to the same principles.

I can announce today that during the weeks before and after Easter, there will be a television advertising campaign to raise awareness of "The Comeback Code" and to encourage visitors back to the countryside. That campaign will be complemented by another range of press adverts focusing on what is open and publicising a visitscotland helpline number that has been set up to provide information to those who are visiting Scotland's countryside.

As well as the effort to control and eradicate the disease, I am acutely conscious of the need to recognise the wider effects on farming and rural communities. The Executive is examining how it can assist farmers in Dumfries and Galloway and throughout Scotland to survive this difficult time. Compensation for the loss of animals is available and we are working with the enterprise networks to ensure that farm businesses have access to their advice.

To assist that process, I am pleased to report that all common agricultural policy outstanding balance payments under the main livestock schemes, together with those under the new less favoured area support scheme, have been met. By tomorrow, £100 million will have been paid to Scottish livestock producers under those schemes. I am well aware that the producers were due those payments, but we have accelerated them and I hope that advancing the payments will be a substantial boost to income flows at this difficult time.

We have also begun to identify what needs to be done in the medium to longer term to help those who have been most affected to recover from the outbreak of the disease. Careful thought will be given to the changes that might be required in the farming industry as it emerges from the crisis to ensure that it is stronger than it was. We formed an impact assessment group to help us to plan for that recovery and we are well into the task. The group is receiving information from around the country. The assessments that emerge from that work will feed into the ministerial committee on rural development that is overseeing and co-ordinating the Executive's response.

Until the disease eradication effort takes effect, it is difficult to begin to introduce longer-term recovery measures. However, through the steps that we are taking to get payments to farmers and the package of measures that was announced last week to provide immediate relief, we have signalled our commitment to helping those who have been most affected. I am also pleased to announce that the Executive will match-fund public donations to voluntary organisations that are alleviating distress caused by the current outbreak. Further details about that scheme will be announced shortly.

I am sorry that the statement was rather long. Parliament is about to go into recess and I thought it right to bring members up to date on all aspects of the issue as it affects Scotland.

David (None, Lothians)

As I said, the statement was, of necessity, long. I will allow a slight overrun at 12.30pm, but two other important statements are due this afternoon. Many members wish to ask questions, so I appeal to them. After the three party spokespersons have spoken, I will try to let in everyone who has a question, so I will not allow a long string of questions from each member. If anyone finds that their question has been answered, I ask them not to feel obliged to ask a question but instead to take their name off the list of those who have asked to speak. One member has done that; I have noted that, and it is to the member's credit.

Fergus Ewing (Scottish National Party, Inverness East, Nairn and Lochaber)

I welcome the minister's statement. All members who have spoken to farmers in Dumfries and Galloway in the past days and weeks will echo what the minister said about the human dimension and the anguish that those who have been affected have suffered. It is therefore particularly apposite that the minister should make the statement before the recess. All parties recognise that the stamping-out policy is correct. I am pleased that there has been no wobbling—in this Parliament at least—with consideration of vaccination as an alternative. There appears to be an all-party consensus that vaccination would not work in the circumstances. The idea has not been considered or used in a party political or other sense.

I will ask the minister about three issues, the first of which is the cause of infection in recent cases. In the first weeks of the crisis, the minister frequently said that one small crumb of encouragement was the fact that each new outbreak could be traced unequivocally to contacts with Longtown market or Hexham market. I have not heard that recently in the minister's statements. Today, he suggested that infection could have been passed by contact between animals, the movement of people or vehicles, or aerosol spread. Does that mean that the minister and the department think that more recent outbreaks have been caused by aerosol spread? If so, what steps are being taken on that? Could the aerosol spread have been a result of the pursuit of the policy of burning rather than burial? I mention that, but I appreciate the difficulties of using burial in the area, for many reasons.

My second point is about regaining export markets for Scotland. The markets cannot be regained for Scotland as a whole until evidence exists that the disease has been stamped out. However, Northern Ireland has restored its export market—I believe that it had one case. Could not the export ban be partially lifted in the provisionally free area, for example, where there have been no cases? Will that option be considered? Will the groundwork for that be laid, including the necessary approaches, communication and negotiation with the European Commission?

My third point is about access, which has important effects on the tourism industry. Given the minister's justification for choosing 16 April as the date from which the restrictions on the movement of animals will be lifted, would not that date also be a suitable one on which to draw a distinction and introduce access guidelines that are based on the new situation? If there is no risk that the virus will be obtained in the northern zone—because, from 16 April, we can rule out the possibility that animals will be infected—the only risk in allowing public access to the provisionally free area is that the virus might be brought in. Does not that merit a rather stronger line and a firmer direction from the Executive? Otherwise, we run the risk that private landowners will deny access for reasons that may not be directly related to the current crisis.

It is my personal view that the people's hopes that the Scottish Parliament could pursue an issue of this nature in a bipartisan way—different from that of the Westminster Parliament—may, at least to some extent, have been realised.

Ross Finnie (Liberal Democrat, West of Scotland)

I am grateful for Fergus Ewing's continuation of that bipartisan approach.

On the cause of infection, there is no doubt that the overwhelming number of cases continue to have a direct connection with the Longtown mart. There are one or two cases in confined areas in which it was believed that the virus may have been inadvertently spread by persons who were feeding animals within the confined area. The chief veterinary officer believes that there is no real evidence of any aerosol spread. He cannot rule it out, because one cannot be absolutely certain about such things. The fact that there is no evidence of aerosol spread has been one of the tiny comforts in our experience of the disease.

On exports, the clear issue is that Scotland has to be disease free. It is the opinion of the chief veterinary officer of Scotland that Scotland is not disease free. That is why even the Highlands and Islands and the area north of the Forth and Clyde are described as provisionally free. We will constantly review whether any change may give rise to sensible market movement. I can assure Mr Ewing that we keep that matter under review.

On access, clearly there has been a great problem. Mr Ewing alluded in his closing remarks to private landowners who seem to be going over the top, even in their interpretation of the advice that has been given. We will meet landowners. We will even explain to those in the provisionally free areas that, because we are relaxing quite a number of the movement restrictions, they should give serious thought to balancing the proportionate risk that is involved in a relaxation of animal movement and their continuing unwillingness to relax access restrictions. When we come to 16 April—I will have to make some announcements in the recess—we will assess the position in the light of the veterinary advice. That date could be critical to the further lifting of access restrictions.

Alex Johnstone (Conservative, North East Scotland)

I thank the minister for providing a copy of his statement in advance, as is traditional. I can reassure him that the Conservatives continue to support the policy and methodology that have been applied to the foot-and-mouth crisis in the south of Scotland.

Perhaps we should remember that there have been criticisms about the resources and the speed with which the foot-and-mouth outbreak has been dealt with. Such criticisms only highlight the differences between the way the crisis has developed north and south of the border. It is therefore appropriate to introduce the idea that we in Scotland, given the different circumstances, should have a separate inquiry into the circumstances that surround the outbreak when we eventually get to the stage of conducting a post mortem on it.

To facilitate that inquiry, I request information on exactly what testing is being carried out on animals that are not confirmed foot-and-mouth cases, but part of the contiguous cull that is being carried out in the south of Scotland. I believe that it will be important, in the aftermath of this event, to know exactly how far the disease had spread. Such information will not be available unless that is addressed at this point.

I welcome the minister's announcement on the relaxation of movement controls, especially in the north and island areas. I have had many phone calls and much correspondence from people who have been affected by those restrictions and who will welcome the change.

However, something that has been highlighted by those approaches is the slowness of the decision-making process in Scottish Executive rural affairs department offices throughout Scotland. A degree of caution is being applied to certain applications for licences that has resulted in moves not being carried out which, in the opinion of many, would be appropriate. Simple failures in the decision-making process are, perhaps, the cause. I ask the minister whether he intends to issue guidance to offices on how those decisions will be made in future to ensure that his intentions are fully and properly carried out.

I welcome the minister's statement on livestock markets and the problems that are associated with them. I urge him to indicate what he hopes to do to return the livestock markets to something like normality, given that the shortage of the opportunity to exchange cattle is coming to crisis point in large parts of rural Scotland.

Finally, I add my support to the remarks made by Fergus Ewing on our long-term return to the export market. In Scotland, especially in the sheep-producing areas, access to the export market is vital to our continued prosperity. I urge the minister, as Fergus Ewing did, to approach the European Commission at the earliest possible opportunity so that while, as the minister said, we remain unaware of when we will be able to return to the export markets, we will know in advance exactly how we go about returning to them.

Ross Finnie (Liberal Democrat, West of Scotland)

I thank Mr Johnstone for continuing the bipartisan approach. I take it therefore that Mr McLetchie's small aberration at question time last week was indeed just an aberration.

David McLetchie (Conservative, Lothians)

On a point of order—

Ross Finnie (Liberal Democrat, West of Scotland)

Mr McLetchie was very critical of how the operation was being handled, but I am happy to accept Mr Johnstone's remark and that what Mr McLetchie said was merely a minor aberration.

David McLetchie (Conservative, Lothians)

I want to make a point of order.

David (None, Lothians)

It is not really a point of order, but a point of argument.

Ross Finnie (Liberal Democrat, West of Scotland)

I will now respond to Mr Johnstone's substantive point. The seriousness and rapidly moving nature of the disease is such that the veterinary officer has no alternative but to rely on section 31 of the Animal Health Act 1981 and schedule 3 to that act. They provide powers to slaughter animals infected by, suspected of being infected by or exposed to infection from foot-and-mouth disease. We are not taking those powers, which are widely drawn, loosely; we do so on the advice of the veterinary officers. We are therefore proceeding with the slaughters largely without any testing. There is no alternative in view of the speed and scale of the disease. We cannot wait 24 or 48 hours. Waiting is simply not practical if we are to achieve the 24-hour slaughter target and the 48-hour contiguous premises target.

I am sorry that Mr Johnstone believes that licences are being granted too slowly. That matter is not easy, because we have to be assured, especially in the direct movements, that all the conditions are in place or can be put in place. To control the infection it is important that vehicles make a single journey. If there are steps we can take, we will take them. I am aware of glitches in the animal welfare scheme. They were due to unfortunate problems at the intervention board, which I understand are being resolved.

I am unable to answer the member's question on marts precisely. I am conscious that marts and collection areas are vital in getting things moving, but I cannot tell the member what I intend to do. However, I will be reviewing the matter on 16 April.

Scotland produces three times as much sheepmeat as it consumes. I am therefore well aware that exports are vital. Obviously, once we get foot-and-mouth-free status, we will be keen to restore our export markets, but I think that we are quite a long way away from that at the moment.

George Lyon (Liberal Democrat, Argyll and Bute)

On behalf of the Liberal Democrats, I welcome the minister's statement, which has laid out clearly the strategy the Executive is pursuing, not only for the livestock sector and for farming communities, but for the wider interests of tourism and the countryside in general. Most important, his statement signals that there is hope, that there is a way forward—the route map was clearly outlined—and, above all, that there is a potential end to this nightmare for all the farming communities that are caught up in the outbreak.

I shall ask only three brief questions because I am aware that a lot of members want to speak. First, I welcome what the minister has said about the status of the islands. Does that mean that the islands are being designated as free from foot-and-mouth disease? Secondly, he mentioned remaining controls. Will he explain what the remaining controls are? The indication seemed to be that, with the general licence, most of the controls will come out, but he obviously believes that some controls will still be in place. Finally, what is the position as regards livestock moving out of the islands? He mentioned livestock moving within and between the islands, but a number of islands have livestock on them that need to be moved off.

Ross Finnie (Liberal Democrat, West of Scotland)

We are not entirely declaring the islands foot-and-mouth free. We take the view that, for there to be some consistency and so that we can build our case for future negotiations with the European Union, there must be a clear, logical process. We must not make exceptions that are not easy to explain later in the day.

The restrictions relating to licensed movements and slaughter will continue, certainly until 16 April. We will also have to retain the 21-day rule for that brief period. I hope that it will be only for that brief period. We have discussed the matter extensively. I have had many representations from the islands and I had further discussions with our veterinary advisers again this morning, but restrictions will have to remain in place for a further fortnight. I know that that decision is a disappointment to many. I can say only that it has been taken on the very best of veterinary advice. I hope that movement out of the islands can be freed up when we review all movements, other than the current licensed movements, again on 16 April.

David (None, Lothians)

I do not think that there is any chance of my calling all the members who want to speak, but I shall start with the two whose constituencies are most affected: Dr Elaine Murray and Alasdair Morgan.

Elaine Murray (Labour, Dumfries)

Will the minister advise members when he expects the 48-hour target for a cull for contiguous farms to be achieved? There are still some problems with the notification of contiguous farms. I am aware of one constituent who heard on the 6 o'clock news that his farm was contiguous. Will the minister look into the problems that people continue to have with help and advice? I am told that it is still the case that some people are being passed between Ayr and Dumfries although the council has put in its own helpline.

Ross Finnie (Liberal Democrat, West of Scotland)

I wish that I could give a precise date for the 48-hour cull. We are experiencing difficulties with logistics. As Dr Murray will be aware, as the crisis has gone on and as we try to accelerate towards that time scale, there have, regrettably, been some errors in transmitting information. That has produced understandable resentment in certain individuals. I understand that, Dr Murray will understand it and every member of the chamber would understand it, but we are meeting some resistance in overcoming that. We are deploying considerable resources so that people can improve lines of communication to deal with that problem. The 48-hour time scale is our clear target but I cannot, in the circumstances, give a precise date for when it will be met. We understand the importance of meeting that target and hope to do so, but we are some way away from doing so and the circumstances that I have outlined make it difficult for me to be more precise about that.

Alasdair Morgan (Scottish National Party, Galloway and Upper Nithsdale)

I will ask about one group outside farming that is affected by the crisis: forestry and farming contractors. Many of them are not susceptible to rates relief because they do not have rated properties. What provision, other than business advice, is being given to those people? What compensation can they expect for the quarantining of very expensive equipment that is either in a forest or in fields and which they cannot remove for at least up to 10 days because it is surrounded by an infected area? That is clearly not their fault.

Secondly, I will ask about the intervention board welfare scheme, which I heard Nick Brown refer to in the House of Commons I think some six weeks ago. It does not seem to be working. Can Ross Finnie say how many animals have been slaughtered to date in Scotland as a result of that scheme?

Ross Finnie (Liberal Democrat, West of Scotland)

I will deal with Alasdair Morgan's first point first. There are clearly two specific problems. Equipment was caught throughout Scotland at the point at which the Forestry Commission closed every forest. I am glad to say that about 200 forests have now reopened. That does not deal with the specific problem of forestry contractors in the infected area, which is what I think Alasdair Morgan is referring to in the context of his constituency. There are currently no specific measures. Through the impact assessment, we are aware of the burgeoning number of businesses that are affected.

I do not think that Alasdair Morgan is right about the date, although I do not have it to hand. I explained in an earlier answer that there was a serious problem with the way the intervention board was processing applications. I regret to say that that was more to do with a problem that occurred down south. I do not wish to apportion blame, but it was unfortunate that when the scheme was put in place down south, there were insufficient disposal facilities to deal with it. Regrettably, we then discovered that applications were being dealt with on a first-come-first-served basis. As I indicated in an earlier answer, I understand that that is being addressed. I do not have a precise figure for the number that have been slaughtered under that scheme, but it is swiftly coming into operation.

Alex Fergusson (Conservative, South of Scotland)

I will start by making plain the position of the Scottish Conservative and Unionist Party. We totally support the overall policy that has been implemented by—

Mike Rumbles (Liberal Democrat, West Aberdeenshire and Kincardine)

Is that a question?

Alex Fergusson (Conservative, South of Scotland)

Perhaps Mr Rumbles will allow me to continue, please.

We support the policy as carried out by the Executive, which was mentioned by my colleague, Alex Johnstone. We have considerable and legitimate concerns about the implementation of that policy, as referred to by another colleague, David McLetchie, in the chamber last week. [Interruption.]

David (None, Lothians)

Order.

Alex Fergusson (Conservative, South of Scotland)

Is the minister aware of the considerable confusion that still exists in Dumfries and Galloway? It has been caused largely by the poor and mixed quality of the information that has emanated from his department. Does he agree with the convener of Dumfries and Galloway Council that the Executive originally offered insufficient support and displayed a lack of leadership, and that the spread of the virus has been exacerbated by the considerable time lapse between suspicion and carcase disposal? Does the minister accept that the five weeks that it has taken to get the cull into full operation has led to an unnecessary spread of disease into the west, which could and should have been contained much sooner? Were those the mistakes to which he referred in his statement?

Ross Finnie (Liberal Democrat, West of Scotland)

No, they were not. The mistakes that I referred to were mistakes in communication with individuals and in the timing of certain procedures in approaching farmers. I put those in the context of this enormous undertaking.

It is remarkable for anyone to apply the benefit of hindsight and talk about the way in which the cull could have taken place. I remind members that, within three, in fact four, days of my announcing to the chamber that it would be necessary to embark on a cull, the number of confirmed cases had doubled. I do not believe that Mr Fergusson, the convener of Dumfries and Galloway Council or I could have anticipated that. The amount of resource that has become necessary to deal with the matter moved at an almost exponential rate in that week to 10 days. There was no way in which we could have anticipated that.

I have to say that when I announced the cull, extensive discussions were held with all parties. Discussions were also opened with the Army as to when and how it could provide resource, and what resource it could provide. At the time that I made the announcement, we were satisfied that we could conduct the cull. However, we did not hesitate to admit that the level of increase in confirmed cases made it impossible to do so without calling upon additional resource, which is what we did. In light of what we were required to do in order to deal with such a number of confirmed cases, I cannot accept the member's criticism.

However, I accept that, with such a huge undertaking, there are problems in certain areas such as communication, the handling of certain individual farms and, as Elaine Murray and Mr Fergusson have pointed out, notification to farms in contiguous areas. Although I apologise for those problems, I should say that we are doing our very best, particularly to accelerate the speed of the cull. Every time we accelerate such a huge exercise, we regrettably run into more problems. As I have said, although I make no apology for the continuation of this policy or for the way in which it has been put together, I accept that we have made mistakes, which we deeply regret.

Ian Jenkins (Liberal Democrat, Tweeddale, Ettrick and Lauderdale)

Will the minister tell us whether the firebreak is now fully in place around the outbreaks in the Scottish Borders? Secondly, will he undertake to make representations to Nick Brown and his advisers to emphasise the importance of establishing a clear firebreak in Northumbria, to forestall any northward spread of the disease?

Ross Finnie (Liberal Democrat, West of Scotland)

I can confirm that the firebreak around the Borders area has been completed. Furthermore, we have constantly made representations to the Minister of Agriculture, Fisheries and Food at Westminster about the imperative need to control any firebreak in Cumbria and Northumbria to protect the Scottish border.

Rhoda Grant (Labour, Highlands and Islands)

I also welcome the statement; I seek clarification on a couple of points. The minister said that movements to and from common grazings would be relaxed. Does that relaxation apply to common grazings only on islands, or does it include crofting communities, which would help welfare problems?

Furthermore, will the minister confirm whether Skye is being considered as an island or as part of the mainland? Will he join me in asking east coast farmers to be patient with crofters and farmers with overwintered stock on their property, as that stock will now be moved on 16 April?

Ross Finnie (Liberal Democrat, West of Scotland)

Although I am not sure whether I am qualified to define when an island is not an island, I will take a risk—I think that Skye is an island.

I appreciate that Rhoda Grant—and all of us—would like the relaxation of movements to be extended to the crofting communities. However, the measures that I have announced today and which will come into force at midnight on Friday will apply only to all the islands. That said, the matter that she has raised will form part of my review on 16 April. Furthermore, I share her view about the need for patience in those who need to move stock.

David Mundell (Conservative, South of Scotland)

I hope that the minister will include in his thanks the more than 300 Dumfries and Galloway Council workers who are still involved daily in the cull. Although that is far more personnel than the Army has provided, those workers have been somewhat overlooked in recent media reports.

There have been too many glitches, and I want the minister to tell us directly how he will deal with the glitches in the public relations part of the exercise. When unacceptable conduct has taken place, too often we hear people saying, "We're just vets", "We're just the military" and so on. Who is in charge of the public relations aspect of the exercise—particularly in relation to the farmers—and what are they doing to ensure that farmers are treated properly and that there is proper public information? Furthermore, how will they ensure that action is taken where unacceptable practices have been carried out?

Ross Finnie (Liberal Democrat, West of Scotland)

As I have frequently said during this statement, we regret those glitches and are employing a great deal of resources to address the issue that the member has raised. The situation changes day and daily; and even if I knew where cases might arise on any given day, it would still be hugely difficult to plan for that day. However, I recognise Mr Mundell's point, and the only assurance that I can give is that we are devoting considerable resources to trying to improve the situation. We are conscious of the growing number of cases in that area, and we are devoting more resources to dealing with the situation.

Richard Lochhead (Scottish National Party, North East Scotland)

I welcome the minister's statement and commend him and his officials on their efforts. My first question concerns the partial lifting of the export ban. Can the minister confirm whether there is any legal barrier to that ban being lifted, and has he had any discussions on that with the European Union? Some areas in the north and north-east of Scotland are further away from the outbreak than other European countries.

Secondly, further to Alex Johnstone's question about testing animals that are being culled, is not it possible to take samples to be tested retrospectively to ascertain the success of the policy?

Ross Finnie (Liberal Democrat, West of Scotland)

Richard Lochhead asks two different questions, in relation to exports. First, it is clear from Commissioner Burns's ruling this week that the concept of regionalisation is not disputed. Secondly, although some areas in the north and north-east of Scotland might be further away from the outbreak, the cases that had direct contact were in Inverness-shire and Aberdeenshire, and it is in those two areas that a cull had to be carried out, to ensure that those areas could be declared free of the disease. We had to do that, and the cases were connected. Only one case has been confirmed in Ireland, and there has been no other movement or contact there. The contact in Aberdeenshire and Inverness-shire was the same contact that has caused the mayhem in Dumfries and Galloway. The issue must be seen from that perspective.

When we have brought the situation under control, we will seek to have the export ban lifted. We must be careful to ensure that we have a policy for dealing with the immediate question of relaxing regulations in the whole of Scotland, which also relates to the way in which our beef trade transports animals to final slaughter. There are many factors to consider, and drawing unnatural lines could have serious consequences for the entire meat sector in Scotland. We must be careful not to do that. However, as I said earlier, I understand the need for us to deal with the export situation.

If we were to allocate time and resources to taking samples for retrospective testing, we would not even be able to keep records of the animals that have been slaughtered. I am not making excuses, but we must get on top of the disease as quickly as we can. I hear what Richard Lochhead says but, under the circumstances, I do not believe that it would be possible to mount such an exercise.

Tavish Scott (Liberal Democrat, Shetland Islands)

Will the minister clarify the application of the 21-day restriction to the islands? He said that that restriction would be retained. Does he understand the practical difficulties that that is causing, for example, where an individual crofter may have two code numbers? Does the 21-day restriction apply to the animal or the holding, and will that be clarified before midnight tomorrow?

Does the minister also understand that the local SERAD office in Lerwick will be deluged with requests from farmers and crofters? Lambing is about to begin in Shetland, but it is not clear from today's statement what restrictions have been removed in the islands.

Ross Finnie (Liberal Democrat, West of Scotland)

I am conscious of the problems resulting from lambing and the restriction of the movement of animals to collection areas or other areas. That is why, even at a late stage in the drafting of my statement, we were discussing with the veterinary officers whether we could alleviate the situation further.

Rather than talk about the farm numbers that I am aware of, I will find out the answer to Tavish Scott's question and will get it to him later today. That would be safer than trying to anticipate numbers and how the restrictions would apply.

John Scott (Conservative, Ayr)

It appears that little or nothing has been learned by MAFF and—by the minister's admission, this morning—perhaps SERAD, following the 1967 outbreak. Will the minister please tell me whether a public inquiry will be held in Scotland into the causal factors, the management and, ultimately, the eradication of the outbreak?

Ross Finnie (Liberal Democrat, West of Scotland)

I am not entirely sure that nothing has been learned from 1967. Let us reflect on the start of the outbreak. The original source of infection was in Heddon-on-the-Wall, and the first time that it was recognised was in pigs that had been transported to Essex. When that infection was traced back to Heddon-on-the-Wall, lesions were found that indicated that the disease had been out and about for four weeks. It is a bit much to suggest that we had not learned any lessons. When a disease as virulent as this has been out and about for four weeks, the situation is made very difficult indeed. We introduced movement restrictions as soon as we heard that the disease was out and about. With all due respect, I would say that lessons had been learned and that the process that is in place has drawn on those lessons.

There is clearly a need for an inquiry, but we should be careful about what we are trying to address. The source of the disease is clearly an issue, as is the question of the distribution mechanism of the disease, as that has ramifications for the way in which we operate marts such as Longtown, although that is not the only relevant mart. We must also ask questions about how we can control animals in a way that is consistent with the control of public disease. There will need to be an inquiry to address those issues, but they are quite narrow. We will have to think about the best way of getting to those answers quickly.

David (None, Lothians)

I was going to stop at this point, but Mr Adam looks as if he is going to burst a blood vessel, so I will call him.

Brian Adam (Scottish National Party, North East Scotland)

Will the minister elaborate on the burial process for the carcases? In light of the fact that, south of the border, some carcases have had to be dug up, would the minister care to give us his view and the view of SEPA as to whether the pits ought to be limed as part of a belt-and-braces approach to ensure that there is no leaching?

Ross Finnie (Liberal Democrat, West of Scotland)

I can assure Mr Adam that the selection of the sites, the overseeing of the way in which those sites operate and the conditions that have been placed on the sites have been worked out in close collaboration with SEPA, the chief veterinary officer and the chief medical officer. I can only say to Mr Adam that we are carrying out those procedures in accordance with the instructions that we have been given. It is up to the veterinary officer to decide whether he believes that lime makes a material difference in the process. SEPA, the chief veterinary officer and the chief medical officer have set the regulations, and I assure Mr Adam that they are making absolutely sure of every step. We recognise that the concern that Mr Adam raises is a major one.

David (None, Lothians)

We are well past time. I have taken careful note of the four members whom I have not called. I will try to make a mention of them this afternoon.

Business Motion

David (None, Lothians)

The next item of business is consideration of business motion S1M-1823, in the name of Mr Tom McCabe, on behalf of the Parliamentary Bureau, setting out the business programme.

Motion moved,

That the Parliament agrees the following programme of business— Wednesday 25 April 2001

2.30 pm Time for Reflection followed by Parliamentary Bureau Motions followed by Executive Debate on Scotland's Skills for Tomorrow

5.00 pm Decision Time followed by Members' Business Thursday 26 April 2001

9.30 am Scottish National Party Business followed by Business Motion

2.30 pm Question Time

3.10 pm First Minister's Question Time

3.30 pm Executive Debate on Rural Transport followed by Parliamentary Bureau Motions

5.00 pm Decision Time followed by Members' Business— [Euan Robson.]

David (None, Lothians)

No members have asked to speak against the motion. The question is, that motion S1M-1823, in the name of Mr Tom McCabe, be agreed to.

Motion agreed to.

Question Time — SCOTTISH EXECUTIVE

David (None, Lothians)

The first item of business this afternoon is question time. We will begin straight away.

Kenneth Gibson (Scottish National Party, Glasgow)

To ask the Scottish Executive, further to the answer to question S1W-12446 by Susan Deacon on 6 March 2001, why expenditure in real terms per head of population by the Greater Glasgow Health Board at 31 March 2000 was less than at 31 March 1992. (S1O-3231)

Susan Deacon (Labour, Edinburgh East and Musselburgh)

The basis for calculating and reporting expenditure by health boards changed substantially in 1992-93. The figures are therefore not comparable—indeed, that was explained fully in the answer that I gave to question S1W-12446.

Kenneth Gibson (Scottish National Party, Glasgow)

I thank the minister for that information, even if she did try to duck and dive a wee bit in her reply. However, the reality on the ground is somewhat different to the one that is touted by the minister.

What does the minister have to say to nursing staff in Glasgow southern general hospital's medicine for the elderly directorate? They recently received a letter from their senior nursing manager that said:

"I am writing to inform you that prior to our entry to the new build at the end of March 2001 the Trust is required to make savings equivalent to the staffing of a 15 bedded ward.

I have to date been able to make most of the savings, however I am unable to find vacancies within DME for the equivalent of 3 WTE"—

David (None, Lothians)

Brevity, please.

Kenneth Gibson (Scottish National Party, Glasgow)

That is three whole-time equivalent nurse posts.

The letter continues by saying that

"it has been agreed that in the first instance we should ask staff whether they wish to volunteer to take up a post"—

David (None, Lothians)

Brevity please, Mr Gibson.

Kenneth Gibson (Scottish National Party, Glasgow)

To take up a post elsewhere.

Given that the minister continues to talk about additional resources for the national health service, why are cuts in nursing staff being implemented?

Susan Deacon (Labour, Edinburgh East and Musselburgh)

I spent two days this week in a whole range of NHS in Scotland facilities. Time and time again, staff and patients asked me why they do not hear more about the good things that are going on in the NHS. They also asked me why they do not hear more balanced debates about the NHS.

People want to hear a realistic assessment of the problems that are faced but, equally, they want to hear recognition of the solid foundations that exist for us to build on. I come to the chamber direct from a conference that was attended by all the leaders of the NHS in Scotland, who were saying exactly the same thing. The Executive is taking forward a programme of investment and reform. We are looking at the big picture. Once again, the SNP is found sniping from the sidelines, spinning the numbers and offering no policies.

Bill Butler (Labour, Glasgow Anniesland)

To ask the Scottish Executive what measures will come into effect at the beginning of the new financial year which will contribute to fairness and equality at work. (S1O-3277)

Alasdair Morrison (Labour, Western Isles)

The Scottish Executive is responsible for the implementation in Scotland of the European social fund community initiative—EQUAL—under which £20 million will be available over the next five years to promote new ways of combating discrimination and inequalities in the labour market.

Bill Butler (Labour, Glasgow Anniesland)

I thank the minister for that reply. Will he outline the effect of the uprating on the national minimum wage in Scotland? What is being done to address the pay gap where such a gap is due to non-compliance by employers?

Alasdair Morrison (Labour, Western Isles)

In Scotland, 110,000 people have directly benefited from the national minimum wage. On legislation on non-compliance, the Equal Pay Act 1970 is already in place and has made real headway. Under that act, women in particular have been able to claim their rights in many landmark cases.

Dorothy-Grace Elder (Independent, Glasgow)

In the name of equality, will the minister consider workplace bullying, which also concerns the European Union? Will the minister help to issue guidelines to workplaces? He will agree that workplace bullying causes endless stress and sometimes suicide. Bullies are always cowards and inadequates who make the lives of other workers a misery.

Alasdair Morrison (Labour, Western Isles)

The Government and the Scottish Executive want to promote fairness and decency in the workplace. Legislation already exists to deal with the most extreme cases of harassment, health and safety issues and discrimination on grounds of sex or disability.

David Davidson (Conservative, North East Scotland)

After all the talk about further regulation of business, I assume that the minister will agree that there are already 3,500 extra business regulations in the UK. Will he ensure and guarantee today that no additional burdens will be placed on Scottish business to disadvantage it against the rest of the UK and decrease the opportunity of creating employment?

Alasdair Morrison (Labour, Western Isles)

I am happy to assure Mr Davidson that we will reduce red tape and increase protection for workers.

John McAllion (Labour, Dundee East)

To ask the Scottish Executive what discussions it has had recently with Dundee City Council relating to urban regeneration. (S1O-3241)

David (None, Lothians)

Which minister is to answer the question? Malcolm Chisholm? I am told that Margaret Curran will answer. I was wrongly informed.

Margaret Curran (Labour, Glasgow Baillieston)

That is quite all right.

David (None, Lothians)

I am not confusing the two of you.

Margaret Curran (Labour, Glasgow Baillieston)

Ministers and officials meet regularly with representatives of the council to discuss urban regeneration and other matters.

John McAllion (Labour, Dundee East)

Is the minister aware that, in debates held in Executive and in Opposition time, the Parliament has debated fisheries or rural Scotland on eight different occasions? I have no complaint about that, but the Parliament has yet to have a single debate on the regeneration of Scottish cities, and I complain about that. Does the minister not recognise that that is a very poor return for the voters of urban Scotland, who overwhelmingly voted for the establishment of the Parliament? Will she use her influence in the Executive to ensure that when we return from the recess, the Parliament debates the future of Scotland's cities and of the people who live in them?

Margaret Curran (Labour, Glasgow Baillieston)

I am more than happy to give John McAllion the assurance for which he asks. I will use whatever influence I have in the Executive to pursue the issues of urban regeneration and the future of cities. The Executive's commitment to those matters is strong. The cities review is under way and the Minister for Social Justice intends to release a statement on urban regeneration in the autumn. I assure John McAllion that I take the issue of poverty and cities very seriously. I will pursue those matters with great energy in the Parliament.

Shona Robison (Scottish National Party, North East Scotland)

I will ask a question about urban regeneration in Dundee. An integrated transport system is an important element of regeneration. Does the minister agree that the proposals for a new train hall at Dundee airport, with bus links to commerce and industry in the city centre, is the way forward for Dundee's transport system and is worthy of support by the Scottish Executive? I hope that the minister will give her support to the scheme when the feasibility study is brought forward.

Margaret Curran (Labour, Glasgow Baillieston)

I am sure that Shona Robison is well aware that I am not the Minister for Transport and Planning and I suggest that she refers that question to that minister.

John Young (Conservative, West of Scotland)

To ask the Scottish Executive how much it has cost police forces, the ambulance and fire services, the NHS and local authorities to deal with incidents arising from the use or misuse of fireworks over the last five years. (S1O-3247)

Iain Gray (Labour, Edinburgh Pentlands)

Information of the kind the member has asked for is not recorded, but the careless use of fireworks still causes too many injuries. The message to be driven home is that fireworks are explosives and must be handled accordingly.

John Young (Conservative, West of Scotland)

I thank the minister for his reply. I mentioned various bodies that can be involved in fireworks incidents. Those include Scottish ambulance services, the Scottish NHS, Scottish fire departments, the Scottish police, Scottish local authorities and, indeed, the Scottish taxpayer.

Is the minister aware that in communications that I have had with Tony Blair's office, and with Kim Howells, the appropriate minister, the response that I have received is that the matter must remain reserved under the Explosives Act 1876? In view of that, would the Scottish Executive be prepared to make an approach to its counterparts in Westminster to have the matter cease to be reserved and brought under the control of the Scottish Parliament?

David (None, Lothians)

Order. Order all round. There are to be no conversations, please, when a question is being asked. The question is, in any case, too long, so let us have the answer.

John Young (Conservative, West of Scotland)

My final point, if I may, Presiding Officer, is that Guy Fawkes is part of English history. Why is he celebrated here in Scotland?

Iain Gray (Labour, Edinburgh Pentlands)

That was a lengthy and erudite question, although I think that Mr Young will find that the Explosives Act was passed in 1875, not 1876.

The important thing is that we do the work that is required to drive down the incidence of accidents related to fireworks. It is disappointing to note that in 1999 there was an increase in firework accidents, although that may have been related to the extended celebrations in the lead-up to the millennium. If Mr Young has a particular instance of why he thinks that fireworks regulation is not serving its purpose and how it could be improved, I would be happy to look at that and to make appropriate representations to the Department of Trade and Industry.

Karen Whitefield (Labour, Airdrie and Shotts)

To ask the Scottish Executive what progress is being made in tackling homelessness. (S1O-3276)

Jackie Baillie (Labour, Dumbarton)

Last week I welcomed the 7 per cent drop in homelessness applications for the quarter ended September 2000. That is the fourth quarter in a row that homelessness applications have fallen, when compared to the previous year. That is a clear indication that the actions which we have taken since coming into office, and the funding we have made available, are beginning to have a positive effect.

Karen Whitefield (Labour, Airdrie and Shotts)

I hope that the minister will join me in welcoming the announcement that, in North Lanarkshire, homeless applications fell by 8 per cent in the period ending September 2000. However, does she agree that statistics are often open to interpretation and misinterpretation and that, for that reason, they are often not a good measure of homelessness?

Jackie Baillie (Labour, Dumbarton)

Like Karen Whitefield, I welcome the news that North Lanarkshire's homelessness figures have dropped. It is one of 16 local authorities that have reported a decrease in the number of applications. The greatest decreases have been in Glasgow, Fife and Aberdeen.

I agree with the valid point that Karen Whitefield made. We need a better understanding of the different groups that are applying as homeless. That is why the Executive is introducing an electronic data capture system that measures people rather than paper.

Linda Fabiani (Scottish National Party, Central Scotland)

Will the minister comment on the fact that, although the Executive insists on using quarterly comparators in an attempt to prove that homelessness is falling, its own statistical bulletin clearly shows that the number of homeless applications annually is rising? Will she answer the concern of Shelter Scotland, among others, that repeat applications, which make up 25 per cent of the homeless applications received, are not shown in the statistics, even though it is clear that the system is failing 25 per cent of people who apply as homeless?