Back to the Scottish Parliament European and External Relations Committee Report
Archive Home

Business Bulletin 1999-2011

Minutes of Proceedings 1999-2011

Journal of Parliamentary Proceedings Sessions 1 & 2

Committees Sessions 1, 2 & 3

Annual reports

SP Paper 458

EU/S3/10/R3

3rd Report, 2010 (Session 3)

Inquiry into the EU Budget Review

CONTENTS

Remit and membership

Report

SUMMARY OF CONCLUSIONS AND RECOMMENDATIONS

INTRODUCTION

EU budget review
Committee inquiry
Conclusions on Committee’s approach to the inquiry
Evidence received to the Committee’s inquiry

STRATEGIC ISSUES

Policy driven budget v juste retour
Generating European added value
Financing the EU budget

IMPLEMENTATION ISSUES

Greater flexibility and responsiveness
Simplification and efficiency of delivery

FUTURE BUDGETARY PRIORITIES

Future policy challenges for Europe
The CAP and fisheries
Structural funds
Climate change and energy
Research, development and innovation

THE ROLE OF SCOTLAND IN EU POLICY-MAKING

Annexe A: Extracts from the minutes of the European and External Relations Committeee

Annexe B: Oral evidence

Annexe C: Written evidence

Remit and membership

Remit:

The remit of the European and External Relations Committee is to consider and report on-

(a) proposals for European Communities legislation;
(b) the implementation of European Communities legislation;
(c) any European Communities or European Union issue;
(d) the development and implementation of the Scottish Administration's links with countries and territories outside Scotland, the European Communities (and their institutions) and other international organisations; and
(e) co-ordination of the international activities of the Scottish Administration.

(Standing Orders of the Scottish Parliament, Rule 6.8)

Membership:

Rhona Brankin
Ted Brocklebank
Patricia Ferguson
Jamie Hepburn
Jim Hume
Michael Matheson (Deputy Convener)
Irene Oldfather (Convener)
Sandra White

Committee Clerking Team:
Clerks to the Committee
Lynn Tullis
Simon Watkins

Assistant Clerk
Lewis McNaughton

Committee Assistant
Kathleen Wallace

Inquiry into the EU Budget Review

The Committee reports to the Parliament as follows—

SUMMARY OF CONCLUSIONS AND RECOMMENDATIONS

Introduction

Conclusions on Committee’s approach to the inquiry

1. The Committee understands that the Commission may publish a communication in July or September 2010, and that this paper will lead into the start of the debate on the EU Multi-Annual Financial Framework (MAFF) for 2014-2020. It appears to the Committee that the EU budget review will not significantly influence the MAFF process to the extent it had been intended at the outset. On this basis, the Committee considers that the best course of action is to transmit the findings of its inquiry to the Scottish and UK governments to contribute to their discussions on the MAFF. The conclusions and recommendations in this report would therefore form the basis of the Committee’s view on what should be the Scottish priorities for the negotiations on the future MAFF.

2. The Committee has agreed to continue to monitor the EU budget review and the MAFF and to assess the Scottish Government’s engagement in the process. Going forward, the Committee urges the Scottish Government to ensure that its EU priorities recognise the significance of the end of the EU budget review and that it attaches the appropriately high-level of priority to the upcoming MAFF and that its Action Plan for European Engagement reflects this commitment.

3. The duration of the Committee’s inquiry – around two years – mirrors the period during which the Commission developed its thinking on and approach to the EU budget review. The Committee is of the view that the Scottish issues raised in evidence during the inquiry are integral to ongoing discussions on the EU budget and the MAFF.

Strategic issues

Policy driven budget v juste retour

4. The Committee strongly supports the evidence that is in favour of a policy-driven EU budget and welcomes the Commission’s drive to pursue this approach in the course of the EU budget review. The Committee recognises that obtaining agreement on the EU budget has in the past proven difficult, at least in part due to the conflict between the different interests of member states and their desire to have some of their contributions returned to them (juste retour).

5. The Committee believes that a policy-driven approach to the EU budget – whereby the EU policy goals determine the budget rather than the other way around – would go some way to ensuring the effectiveness of EU spending in future. The Committee recognises, however, that such a move could only take place in the context where all member states agreed with the advantages of a policy-driven budget. To this end, the Committee recommends that the Scottish Government promotes a policy-driven budget in its discussions with the UK Government on the EU budget.

Generating European added value

6. The Committee agrees with the principle of added value and supports the statement in the Commission’s 2007 consultation on the EU budget review, which stated that future EU spending should “provide clear additional benefits compared to action by individual member states alone in pursuing policies that promote the European common interest”.1 The Committee also supports the development of a clear set of criteria for assessing whether more effective action could be taken at EU level than at national level.

7. The Committee recommends that the Scottish Government adopts an approach to the EU budget which ensures that added value, supported by clear assessment criteria, is at the heart of all future European Union spending decisions.

Financing the EU budget

8. The Committee acknowledges that the current principal method for financing the EU budget – through member state contributions – serves to enhance the concept of juste retour. However, the Committee recognises the difficulties associated with agreeing an alternative mechanism of financing the EU budget, such as one based on VAT receipts across all member states.

9. The Committee also recognises that there are different views on the introduction of a system linking the raising of revenue to the achievement of policy goals, for example, through trade emissions or green taxes. The Committee considers, however, that further work is required to assess the implications of such a revenue system and calls on the Scottish and UK governments to consider the likely impact of such a system on Scotland’s economy.

Implementation issues

Greater flexibility and responsiveness

10. The Committee supports the need for long term strategic planning alongside greater flexibility and responsiveness in the EU budget. The Committee considers that the EU has shown a degree of flexibility through the targeting of support through the previously established Globalisation Adjustment Fund during the current financial downturn, but urges such an approach to be rolled-out more widely across all EU multi-annual funding programmes, particularly in relation to structural funds.

Simplification and efficiency of delivery

11. The Committee notes the concerns raised in evidence about the high level of bureaucracy and unnecessary administrative burden currently associated with EU funding streams. The Committee welcomes the Commission’s acknowledgement in its draft proposals of the need to improve efficiency and quality of delivery by streamlining and reorganising management modes.

12. The Committee recommends that the Scottish Government makes representation to the UK and the EU for greater simplification of European Union spending systems and supports the Commission in the development of these new systems.

Future budgetary priorities

Future policy challenges for Europe

13. The Committee recognises that Europe is facing some significant challenges over the coming years, including ensuring the successful emergence from the economic crisis, an ageing population, combating climate change, and energy considerations such as the security of supply. The Committee also considers that the EU’s economic development strategy (Europe 2020) will be a significant tool in ensuring that Europe’s place in the global economy is strengthened.

14. The Committee believes that for Europe to be successful in meeting its future challenges, the EU budget must provide the framework for European Union spending to be targeted at the associated policy priorities. The Committee recommends that the Scottish Government works with the UK Government to ensure that the EU budget is targeted at these priorities.

The CAP and fisheries

15. In Scotland, the CAP element of the EU budget provides an important source of income and support to farmers. However, the Committee agrees with much of the evidence received that the CAP must continue to be reformed in a way that maximises the potential for Scotland.

16. As part of the reform programme, the Committee emphasises the need to consider the socio-economic and environmental impact of the CAP, particularly on rural communities and agriculture-related industries. In addition, the Committee considers that the criteria used for allocation of CAP funding should take account of geographical disadvantages, such as peripherality and population sparsity. On this basis, the Committee supports a holistic approach to reforming the CAP, which recognises that farmers play an important role in the wider environment and, as such, should continue to receive some level of financial support from the EU, possibly on grounds of general land management and the supply of public goods. The Committee recommends that the Scottish Government promotes these considerations in future discussions on the CAP.

17. In relation to fisheries, the Committee recognises that the impact of the reform of the Common Fisheries Policy (CFP) will have a proportionately greater impact on Scotland compared to the rest of the UK. Thus, in terms of the EU budget review, the Committee highlights the importance for Scotland of this policy area.

18. The Committee recommends that the Scottish Government supports continuing CAP and fisheries funding coming to Scotland in its discussions with the UK Government.

19. In 2009, the Committee identified the upcoming CAP and CFP reforms as having particular significance for Scotland. The Committee encourages the Scottish Parliament’s Rural Affairs and Environment Committee to continue to engage, as agreed, on these issues.

Structural funds

20. The Committee strongly supports the sub-national approach of EU regional policy and believes that whilst proportionately more support should go to less wealthy member states, regional policy should target disadvantaged areas in all EU member states. The Committee recommends that the Scottish Government adopts this position.

21. Given the likely reduction of regional funding coming to Scotland, the Committee recognises that Scotland will need to ensure that it is well-placed to benefit from other funding streams, such as the Framework Programme for research and development, and that Scottish organisations that have become reliant on EU regional funding are primed to be able to successfully navigate any transition period. The Committee recommends that the Scottish Government ensures that Scottish organisations are aware of any changes to the EU funding streams and are able to position themselves in order to benefit from future funding.

Climate change and energy

22. The Committee welcomes the Commission’s recognition that climate change and energy considerations are critical issues for Europe. The Committee wishes to emphasise the substantial opportunities for Scotland which lie in the measures for combating climate change and in the development of more renewable forms of energy. The Committee, therefore, would support proposals to increase the proportion of the EU budget focused on climate change and energy. The Committee recommends that the Scottish Government continues to promote Scotland’s interests in these areas and that it ensures that Scotland’s eligibility as a recipient of associated EU funding is maximised.

23. The Committee also acknowledges the comments made in evidence about the need to ensure that levels of financial support flow from Europe to less-developed countries to help combat climate change. The Committee wishes to emphasise that such support should supplement the support funding that those less-developed countries already receive.

Research, development and innovation

24. The Committee agrees with the evidence it has received during the inquiry which emphasised that Scotland, with its world-leading research industry, has a significant contribution to make in this field.

25. The Committee considers that it is vital that the research and development and innovation is prioritised as a source of European Union spending and, specifically, that there is a focus on supporting long-term emerging technologies. The Committee considers that such a focus will be vital to ensuring economic growth in Europe in the coming decade, as set out in the Europe 2020 strategy.

26. In addition, the Committee calls on the Scottish Government to raise awareness of the Framework Programme (as a possible source of EU funding), to seek to increase participation of Scottish organisations, and to maximise the benefits for Scotland. The Committee welcomes the Scottish Government’s commitment to engage in the forthcoming reform of the EU research budget and requests that the Committee be kept informed of the Government’s work in ensuring that Scottish interests are well-represented in the future negotiations at UK and EU levels.

The role of Scotland in EU policy-making

27. The Committee notes the evidence to the inquiry that highlighted the important role that Scotland and the Scottish Parliament has in defining what it considers to be the priorities for any future EU budget. The Committee believes that a coherent Scottish approach is the best and most effective approach to ensuring this is achieved.

28. The Committee supports the view that wider engagement at EU level is important, especially in the context of institutional changes provided for under the Treaty of Lisbon. To this end, the Committee will seek to engage with Scottish stakeholders, Scottish parliamentary committees and the wide range of EU actors in the furthering of its EU strategy.

INTRODUCTION

EU budget review

29. As part of the settlement of the Multi-Annual Financial Framework (MAFF) for 2007-2013, EU member states agreed that a review of the EU budget should be undertaken. The MAFF for 2007-2013 had proven to be particularly contentious in relation to issues such as the size of the budget, the amount of money spent on agriculture, and on the UK rebate and other correctional mechanisms.

30. The MAFF for 2007-2013, with the inclusion of a review clause, was agreed by the European Council in December 2005. The Council’s decision stated—

“Europeans are living through an era of accelerating change and upheaval. The increasing pace of globalisation and rapid technological change continues to offer new opportunities and present new challenges. Against this background, the European Council agrees that the EU should carry out a comprehensive reassessment of the financial framework, covering both revenue and expenditure, to sustain modernisation and to enhance it, on an ongoing basis.

“The European Council therefore invites the Commission to undertake a full, wide ranging review covering all aspects of EU spending, including the CAP, and of resources, including the UK rebate, to report in 2008/9. On the basis of such a review, the European Council can take decisions on all the subjects covered by the review. The review will also be taken into account in the preparatory work on the following Financial Perspective.”2

31. In September 2007, under instruction from the European Council to consider reform of the EU budget process, the European Commission issued a public consultation paper3 (the consultation period closed on 15 June 2008). The review was not intended to determine the next MAFF (for 2014-2020) – a task for the incoming Commission – but rather, to provide “a unique opportunity for a thorough assessment of the EU budget and its financing, free from the constraints of a negotiation on a financial framework.” On this basis, the aim of the review was to—

“[…] set out the structure and direction of the Union's future spending priorities, assessing what offers the best added value and most effective results. It will also examine how the budget works, how to get the right balance between continuity and responding to new challenges, and whether it should be managed differently. Finally, the review will take a fresh look at the best way of providing the resources necessary to fund EU policies.”4

32. The results of the public consultation, together with the outcome of a conference5 on the review were published by the Commission on its website.6 It had been widely anticipated that the process would conclude with the publication by the Commission of a communication paper. However, an interim ‘non-paper’7 emerged in October 2009 which created a considerable degree of controversy and was disowned by the Commission.

33. The non-paper stated the Commission’s belief that “a root and branch reform of the EU budget is needed” and set out five principles of budget reform: generating European added value; concentrating on key priorities; greater flexibility and responsiveness; simplification and efficiency of delivery; and fairness and added value in the financing of the budget.8

34. It is still the intention of the European Commission to publish a communication paper, albeit much delayed. However, it remains unclear how the budget review will contribute to the upcoming MAFF, given the lateness of its publication.

Committee inquiry

35. As part of its scrutiny of the Scottish Government, the Committee regularly takes evidence from the relevant Scottish Government Minister on the Government’s priorities for engagement in Europe. In September 2007, the then Minister for Europe, External Affairs and Culture, Linda Fabiani MSP, presented the Government’s EU priorities, including six, longer-term EU political objectives, to the Committee.9

36. As one of its political objectives, the Government identified the EU budget review as likely to have considerable implications for a number of policies in Scotland. The Government expressed its commitment that Ministers and officials would work to ensure that Scottish interests were taken into account in the review, particularly in relation to the future of structural funds and research and development spending. The Government further indicated that it wanted to ensure that EU expenditure is rationalised and that Scotland continued to benefit from this resource.10

37. After the Minister for Europe, External Affairs and Culture gave evidence to the Committee in September 2007, the Committee agreed to monitor the role of the Scottish Government in delivering its objectives in relation to the EU budget review. The Committee held two initial evidence sessions on 5 February and 24 June 2008 and then, in September 2008, agreed to conduct an in-depth inquiry into the implications for Scotland of the EU budget review. The remit of the inquiry was to scrutinise the Scottish Government’s approach to the EU budget review; and to identify the key issues of relevance to Scotland raised by the budget review.

38. The Committee’s inquiry was split into two distinct phases. Phase 1 focused on undertaking preparatory work on the EU budget with a particular focus on ‘blue skies’ thinking in relation to the EU budget through to 2025. The Committee held evidence sessions on 4 November 2008, 27 January 2009 and 3 February 2009.

39. Phase 2 of the inquiry considered the potential opportunities and the challenges that future reform of the EU budget might present for Scotland. The Committee held two evidence sessions covering specific policy priorities of importance to Scotland, including the Common Agricultural Policy (CAP), climate change and energy, regional policy, competitiveness and innovation. The evidence sessions took place on 17 November and 15 December 2009.

40. During the Committee’s second phase of the inquiry, the Scottish Government reframed its EU priorities in a new Action Plan for European Engagement.11 The document stated that the Government’s EU priorities would focus on four policy areas of significance to Scotland: energy and climate change; marine environment; research and creativity; and justice and home affairs. Whilst the EU budget review was referred to in the Action Plan’s forward look as one of a number of key issues on which the Scottish Government intended to focus on in the EU in 2009, the review no longer appeared as a headline EU priority.

Conclusions on Committee’s approach to the inquiry

41. The Committee understands that the Commission may publish a communication in July or September 2010, and that this paper will lead into the start of the debate on the EU Multi-Annual Financial Framework (MAFF) for 2014-2020. It appears to the Committee that the EU budget review will not significantly influence the MAFF process to the extent it had been intended at the outset. On this basis, the Committee considers that the best course of action is to transmit the findings of its inquiry to the Scottish and UK governments to contribute to their discussions on the MAFF. The conclusions and recommendations in this report would therefore form the basis of the Committee’s view on what should be the Scottish priorities for the negotiations on the future MAFF.

42. The Committee has agreed to continue to monitor the EU budget review and the MAFF and to assess the Scottish Government’s engagement in the process. Going forward, the Committee urges the Scottish Government to ensure that its EU priorities recognise the significance of the end of the EU budget review and that it attaches the appropriately high-level of priority to the upcoming MAFF and that its Action Plan for European Engagement reflects this commitment.

43. The duration of the Committee’s inquiry – around two years – mirrors the period during which the Commission developed its thinking on and approach to the EU budget review. The Committee is of the view that the Scottish issues raised in evidence during the inquiry are integral to ongoing discussions on the EU budget and the MAFF.

Evidence received to the Committee’s inquiry

44. The Committee issued a call for evidence in September 2008 which was followed, in July 2009, by a targeted approach to various Scottish organisations in relation to Phase 2 of the inquiry.

45. A list of those who contributed oral evidence to the Committee’s inquiry is included in the extracts of the minutes of proceedings at Annexe A; and the Official Reports are included at Annexe B. A list of those who provided written evidence is included at Annexe C (the written submissions are published on the Parliament’s website.12)

STRATEGIC ISSUES

Policy driven budget v juste retour

46. Stephen Quest from the European Commission reported that the responses to the Commission’s consultation indicated that—

“There is support and consensus around the idea that the budget review should be policy driven rather than merely financially driven. So, we should start by considering what policies should be supported at the European level through the budget and then talk about the money stage later.”13

47. Nonetheless, Stephen Quest recognised that juste retour was “an extremely tricky issue” and emphasised that this was why the Commission had “pushed hard” the idea of a policy driven approach to the budget review.14

48. Whilst noting that the Commission was keen to pursue a policy-driven budget in the future, evidence made reference to the difficulties in agreeing the budget. Elspeth Attwooll, who gave evidence to the Committee as a former Scottish MEP, stated that—

“The difficulty with the system is that when the financial perspective sets the production levels, there is conflict between member states according to where they see their interests lying. That is complicated further by some member states' belief that they have not benefited sufficiently from the distribution.”15

49. Professor Scott, of the Royal Society of Edinburgh (RSE), agreed and suggested that “the path dependency built into the European budget – the politics of the issue rather than the economics – will be the crucible in which the budget is determined”.16 He explained that—

[…] “the economics of the situation do not support huge amounts of money going outside the post-2004 countries, for structural funds for example, although the politics probably demands that some concession be made to the existing allocation of resources, particularly as any such transfer or reorientation will affect the donor countries—the net contributor countries—rather than the net beneficiary countries. I therefore agree that politics comes into it.”17

50. Dr Zuleeg, of the European Policy Centre, stated that—

“For the budget review, we have been asked to look at a policy-driven budget, which for us means agreeing on what the common challenges are across Europe, defining what our objectives are and what the common interests are, and deciding whether the EU level is the best level at which to act. After that, we must determine what tools are needed to act. Only then should we decide what the budget envelope should be.

“However, that is not what happens currently with the EU budget, which is why we have emphasised in all our work that we think that the governance of the budget must change. With the current governance arrangements, we cannot see how it will be possible to have such a policy-driven budget in future. Budget reform is necessary, but the big question that remains is whether member states are willing to tackle that thorny issue.”18

51. Dr Hagemann, of the European Policy Centre, suggested that “one problem with the negotiations is the fact that we talk only about the figures and not about what the budget exists to address”.19 COSLA made a similar point and stressed that a “bottom-up approach – whereby policy objectives are defined first then EU spending priorities are set to match these policy objectives – should be the guiding principle for the EU budget”.20

52. The Committee strongly supports the evidence that is in favour of a policy-driven EU budget and welcomes the Commission’s drive to pursue this approach in the course of the EU budget review. The Committee recognises that obtaining agreement on the EU budget has in the past proven difficult, at least in part due to the conflict between the different interests of member states and their desire to have some of their contributions returned to them (juste retour).

53. The Committee believes that a policy-driven approach to the EU budget – whereby the EU policy goals determine the budget rather than the other way around – would go some way to ensuring the effectiveness of EU spending in future. The Committee recognises, however, that such a move could only take place in the context where all member states agreed with the advantages of a policy-driven budget. To this end, the Committee recommends that the Scottish Government promotes a policy-driven budget in its discussions with the UK Government on the EU budget.

Generating European added value

54. The Committee received evidence on the principles that should determine the allocation of the future EU budget and, in particular, on the concept of EU added value and how this should be determined.

55. Stephen Quest reported that in response to the Commission’s consultation, consensus had emerged on the need to focus on EU added value “ensuring that we extract the maximum value added through the EU budget”.21 However, he acknowledged that there was a need to find a clear set of criteria that could be used in assessing whether more effective and better action could be taken at EU level than at national level22 and indicated that part of the Commission’s current exercise was “to identify the criteria”.23

56. One of the Commission’s five principles of the budget reform (published in its draft communication) was that “the EU budget must focus more on activities which produce high levels of European added value”.24 To do so, a number of conditions had to be met: policy relevance – EU spending should address Europe’s key policy challenges as defined in the Treaties; subsidiarity – including that EU spending should address cross-border or transnational issues which cannot be satisfactorily handled by member states; and proportionality – there should be an assessment of the effectiveness and efficiency of the delivery mechanisms.25

57. Dr Zuleeg suggested that when considering the future challenges one should be asking—

“Is there a role for EU policy? Is there a legal basis for EU action? Are the member states willing to give the EU such a role? Is there a subsidiarity issue? Would EU involvement really add value? Are there issues of interdependence and cross-border effects that make it necessary to act at a European level?”26

58. Professor Begg, of the London School of Economics, indicated that “one useful way of looking at the EU budget is to distinguish between public goods that have a European value and distributive policies that ensure that relatively poor countries receive a net contribution and relatively rich countries make a net payment into the budget”. He suggested that issues such as climate change are best addressed at European level while issues such as interpersonal distribution are best tackled at local or member state level.27

59. For his part, Bill Newton Dunn MEP considered that the “EU exists to improve cross-border problems” and highlighted research and development, policing and the European Space Agency as examples of this.28

60. The Committee agrees with the principle of added value and supports the statement in the Commission’s 2007 consultation on the EU budget review, which stated that future EU spending should “provide clear additional benefits compared to action by individual member states alone in pursuing policies that promote the European common interest”.29 The Committee also supports the development of a clear set of criteria for assessing whether more effective action could be taken at EU level than at national level.

61. The Committee recommends that the Scottish Government adopts an approach to the EU budget which ensures that added value, supported by clear assessment criteria, is at the heart of all future European Union spending decisions.

Financing the EU budget

62. Professor Begg set out his view that although “we expect the EU to do something about climate change, or to support the Lisbon strategy in ways that boost collective European competitiveness in response to the challenges of globalisation”, “we do not endow it with the resources to do much”. He considered that “the fundamental political choice is about what we think the EU is” and suggested that if it is to be regarded, above all, as an international organisation then “we should limit it to very moderate intergovernmental contributions”.30 On the other hand, he said that—

“[…] if we expect the EU to do something rather more fundamental to create the public goods that we wanted to create at European level—whether that is European research or social policies or anything of that nature—it would be difficult to do that without the means.”31

63. Stephen Quest explained the current mechanisms for financing the EU budget—

“Revenues are raised through a mix of different sources of what we call in Brussels jargon "own resources". The largest part is generated as a proportion of each country's gross national income resource—it is known as GNI resource and is in essence a pro rata payment. That is topped up with VAT receipts and traditional resources from customs duties and agricultural duties, which were the original source of own resources in the early days of the Community.”32

64. In the evidence received there was an acknowledgement that the current principal method for financing the EU budget – through member state contributions – served to enhance the concept of juste retour. For example, Dr Zuleeg argued that—

“Governments follow the juste retour principle, which means that they look at the net amount that they contribute. That makes it extremely difficult to do anything rational because, if the Government's negotiating position is based on the net amount that it will get from the budget, it does not matter how the contributions are calculated. We therefore need to tackle the big problem of how we can move away from the juste retour principle.”33

65. Dr Hagemann suggested decoupling consideration of the expenditure and revenue sides from the budget negotiations and having a policy-driven budget. She considered that such an approach “could help to tackle the block on how to meet the priorities, which we sometimes see in negotiations”.34

66. Witnesses discussed a range of possible alternatives to the own resources mechanism and the value of these alternatives. For example, Stephen Quest suggested that one option was consideration of more targeted ways of raising revenue, for example, through emissions trading regimes or green taxes on airline tickets. He suggested that—

“There is panoply of possible sources of sectoral revenue-raising devices, each of which has advantages. A notable advantage of the approach is that we would start to link the raising of revenue with the achievement of a policy goal.”35

67. A further option suggested by Professor Begg was the use of a corporate tax income.36 Stephen Quest also referred to the “most ambitious and challenging idea” of a European-level tax.37 However, he considered that this was probably “not on the short-term agenda”. This view was shared by Dr Zuleeg who indicated that “at the moment, it is extremely unlikely that we will see a move in that direction”.38

68. There seemed to be general agreement that the most likely result of the review in terms of financing the EU budget was maintenance of the status quo. Professor Begg stated that “if any single formula seems most likely, it is the continuing use of the gross national income resources… as the principal funding instrument for the EU budget”.39

69. Dr Zuleeg indicated that, in any event, his own preference was for a GDP based contribution on the basis that it is simple and member states’ contributions are based on the same factor whereas there were significant differences in VAT receipts in EU member states.

70. The Committee acknowledges that the current principal method for financing the EU budget – through member state contributions – serves to enhance the concept of juste retour. However, the Committee recognises the difficulties associated with agreeing an alternative mechanism of financing the EU budget, such as one based on VAT receipts across all member states.

71. The Committee also recognises that there are different views on the introduction of a system linking the raising of revenue to the achievement of policy goals, for example, through trade emissions or green taxes. The Committee considers, however, that further work is required to assess the implications of such a revenue system and calls on the Scottish and UK governments to consider the likely impact of such a system on Scotland’s economy.

IMPLEMENTATION ISSUES

Greater flexibility and responsiveness

72. The Committee heard evidence about the need for flexibility in governing the EU budget, particularly in the context of the current economic crisis and the need for the EU to respond effectively.

73. Professor Scott stated that—

“The one thing for which the Commission budget has rightly been criticised in the past is that it is not very agile. Agility in the assignment of resources is crucial in the context of the competitive challenges that will confront the European Union over the budget period.”40

“The EU budget's ability to deal with the global challenges that countries and regions face is highly constrained … I am slightly ambivalent about excessively pre-programming support, which tended to happen in the past. I prefer more of a framework approach that gives us flexibility to move within resources or resource pots.”41

74. Elspeth Attwooll suggested that there was an “increasing realisation that the system is not sufficiently adaptable to changing conditions – hence, the provision [in the Treaty of Lisbon] to reduce the length of the Multi-Annual Financial Framework (MAFF) period from seven to five years and to introduce more flexibility into the process”.42

75. The Scottish European Green Energy Centre (SEGEC) also suggested that the EU budget needed to be capable of more flexible deployment in future. It considered that such flexibility was particularly important in relation to security of energy supply, where sudden events could create significant strains on security for particular member states or regions.43

76. James Elles MEP noted that the European Parliament Committee on Budgets had considered that—

“[…] more flexibility within and across headings is an absolute necessity for the functioning capacities of the Union not only to face the new challenges of the EU but also to facilitate the decision-making process within the institutions.”44

77. COSLA made a similar point and suggested that fewer and bigger funding programmes would allow for flexibility. In order to respond to unplanned needs, COSLA made two further suggestions: more flexibility should be given to the EU multi-annual funding programmes over the financial period, particularly to the Structural Funds; and the size and speed of the current anti-cyclical EU funds, such as the Globalization Adjustment fund, should be increased so that this money can be quickly made available where there are unanticipated economic crises affecting a given area or areas.45

78. However, James Elles MEP also stressed the importance of long-term strategic planning. He suggested that the EU budget should have long-term planning systems in place to protect the sums of money that would be needed to implement the 2020 agreements on climate change. He stated that “everyone took those decisions, but we are only now coming to understand what they will cost in terms of renewables and the carbon-trading system which at the moment is not included in EU revenue”.46

79. Professor Bachtler, of the University of Strathclyde, referred to the need for both long-term planning and flexibility—

[…] “the point about the EU dealing with the more strategic issues that span electoral cycles and enable some sort of predictability and long-term planning is important. Having said that, given the uncertainty in areas such as the mitigation of and adaptation to climate change, as well as the future economic situation, there is a strong argument for increasing the flexible element of the EU budget.”47

80. Similarly, Stephen Quest acknowledged that “there is a tension in the budget between the natural desire of member states to have stability and predictability and to limit expenditure – which tends to lock things down rather rigidly – and the need over a seven-year period to respond flexibly to new developments and new policy needs”.48

81. Stephen Quest suggested that there needed to be enough flexibility to ensure that the EU could respond to the additional new challenges that will confront it.49 He indicated that the budget currently had a number of mechanisms to enable the EU to respond to crises within the EU or outside and referred, as an example, to the Globalisation Adjustment Fund which was created to respond to the impact of globalisation in certain industrial sectors in member states. He also pointed to the solidarity fund that deals with natural disasters and emergency relief.50

82. The Committee supports the need for long term strategic planning alongside greater flexibility and responsiveness in the EU budget. The Committee considers that the EU has shown a degree of flexibility through the targeting of support through the previously established Globalisation Adjustment Fund during the current financial downturn, but urges such an approach to be rolled-out more widely across all EU multi-annual funding programmes, particularly in relation to structural funds.

Simplification and efficiency of delivery

83. In evidence received by the Committee, the current application process for receiving EU funding was described as bureaucratic and causing unnecessary administrative burdens. For example, the Scottish Trades Union Congress (STUC) stated that the “surrounding bureaucracy, particularly the procurement rules, had been very detrimental” to it progressing its programme for trade union learning in the workplace.51 Similarly, Highlands and Islands Enterprise (HIE) stated that it was aware of organisations that “would be able to use EU funding very well, but have been put off by the bureaucracy, administration and audit requirements”.52

84. Universities Scotland agreed that bureaucracy needs to be minimised and suggested that European funding mechanisms along the lines of the European Research Council could be more attractive propositions. The European Research Council was described as having “essentially borrowed a UK research funding model that is relatively un-bureaucratic and which gives decent support to research at a particular price level”.53

85. In its written evidence, COSLA stated that “the multiplicity of funding programmes should be clearly avoided.” It suggested that “the preferred option is to have a small number of large funding programmes, reflecting the big policy priorities for the EU”. COSLA recognised what it termed as “the practical, political and treaty limitations that could prevent this approach from being fully developed”, but considered it to be an idea worth exploring.54

86. The Commission’s draft communication included simplification and efficiency of delivery as one of its five key principles. The paper explained that—

“Primarily, this means looking to improve the efficiency and quality of delivery by further streamlining or reorganising both programming and management modes. Further improvements to the transparency of EU funding will also play a role, as will rigorous but cost-efficient controls on spending.”55

87. Professor Bachtler referred to the mechanisms for delivering structural funds in particular—

“We know that in Scotland, as in other parts of the EU, major difficulties have been associated with the complexity and bureaucracy of delivering structural funds, for example. Many of those difficulties arise because of the system of shared management of the policy among the Commission and the member states. More generally, there is a lack of co-ordination and coherence among policy areas. So there is the challenge of how to resolve such difficulties in the future but, as other policies increase in importance, we need also to ensure that the same problems of implementation are not replicated in the management systems that are designed for delivery.”56

88. The Committee notes the concerns raised in evidence about the high level of bureaucracy and unnecessary administrative burden currently associated with EU funding streams. The Committee welcomes the Commission’s acknowledgement in its draft proposals of the need to improve efficiency and quality of delivery by streamlining and reorganising management modes.

89. The Committee recommends that the Scottish Government makes representation to the UK and the EU for greater simplification of European Union spending systems and supports the Commission in the development of these new systems.

FUTURE BUDGETARY PRIORITIES

Future policy challenges for Europe

90. The Committee explored the long-term challenges and trends facing the EU and how these might impact on the way in which the budget is allocated in the future.

91. There was general agreement among witnesses that the key long-term challenges facing the EU were: tackling climate change; energy, including security of supply; the financial and economic crisis; promotion of competitiveness, growth and jobs; and strengthening Europe’s place in the world. Other important challenges included: the ageing demography; the transition from fossil fuels to renewable energy; cross-border crime; and the enlargement of the EU.

92. Stephen Quest reported that the Commission’s consultation had revealed an “emerging consensus that the key forward-looking priorities at EU level were around issues such as competitiveness, growth and jobs, combating climate change and energy, including the security of supply”.57 This consensus was reflected by the ‘priority axes’ set out in the Commission’s non-paper: sustainable growth and jobs; climate change and energy; and a global Europe.

93. As the EU’s focus moves towards meeting these future challenges, it was clear that the EU budget requires reform. Elspeth Attwooll suggested that in view of these demands, “it is not surprising that the Commission is looking to different ways of allocating the whole, nor is it surprising that it is emphasising areas in which added value will be gained from European action in general, and transnational and cross-border co-operation in particular”.58

94. Similarly, Professor Bachtler stated that—

“It is clear that the ambition is to increase spending on the promotion of moves towards a low-carbon economy, on promoting competitiveness and growth and, to a certain extent, on strengthening the EU's influence in the world. However, if there is to be a stable EU budget, which I think is the working assumption in Brussels, those ambitions will mean either a reduction or a reorientation of spending on the CAP and cohesion policy.”59

95. In evidence to the Committee, witnesses considered that the EU’s likely spending priorities were, overall, closely aligned with Scotland’s interests and with those of most of the UK’s. Professor Bachtler suggested that—

“opportunities lie in the fact that the proposed EU spending priorities are closely aligned with Scottish policy priorities and interests, such as building research and development capacity, research collaboration and networking, public-private co-operation, lifelong learning, integration of migrants, and developing renewable energy sources, carbon capture technology and energy networks.”60

96. Donald Anderson, of the Royal Society of Edinburgh, agreed and stated that—

“Scotland's long-term economic interests lie in increased focus on energy security and competitiveness. We have significant advantages in those areas by virtue of our inclement weather. We also have an advantage because we have an unusually good base for a country such as ours in the universities and their research and development work.”61

97. The Committee recognises that Europe is facing some significant challenges over the coming years, including ensuring the successful emergence from the economic crisis, an ageing population, combating climate change, and energy considerations such as the security of supply. The Committee also considers that the EU’s economic development strategy (Europe 2020) will be a significant tool in ensuring that Europe’s place in the global economy is strengthened.

98. The Committee believes that for Europe to be successful in meeting its future challenges, the EU budget must provide the framework for European Union spending to be targeted at the associated policy priorities. The Committee recommends that the Scottish Government works with the UK Government to ensure that the EU budget is targeted at these priorities.

The CAP and fisheries

99. Witnesses emphasised the significance of the CAP element in the EU budget. Dr Zuleeg acknowledged, for example, that “if we fix the size of the budget overall and a large percentage is fixed for the CAP, what is left for other policy areas will be quite limited”.62 In written evidence, the National Farmers Union Scotland (NFUS) highlighted the CAP as the single largest area of EU expenditure (around 40% of the EU budget) and declared that “it is, therefore, right that much of the focus on reviewing the EU budget is directed at the CAP”.63

100. Other evidence suggested that there was recognition among member states that the CAP should be reformed. Dr Hagemann stated that—

“It was really interesting that responses from governments and non-governmental organisations to the Commission’s consultation on the CAP last year showed that almost all countries are willing to reform it.”64

101. James Elles MEP agreed that there would be further amendment to the agricultural policy and suggested that there was French political will to support this.65 Nonetheless, other evidence suggested that in future, the real resistance to abolishing the CAP will come from member states other than France. Donald Anderson referred to new member states – which saw the CAP as one reason for joining the EU – and suggested that “we are probably in for quite a long game”.66

102. Similarly, Professor Begg argued that—

“[…] reform of the CAP will affect central and eastern Europe more than it affects France. Two things occurred: first, countries in eastern and central Europe were denied the full flow of money from the CAP during the current Multi-Annual Financial Framework; secondly, they believe that they banked promises to obtain that money from 2013 onwards.”67

103. Overall, witnesses tended to agree that there would continue to be gradual reform of the CAP rather than radical change. Dr Zuleeg pointed out that the amount allocated to the CAP was not as big as it had been and would reduce significantly before the end of the current financial framework.68 This perception of a gradual reform of the CAP was shared by James Elles MEP who pointed out that the CAP has developed over time and that in another 10 years would be different again. Likewise, Professor Begg concluded that CAP would be reformed “but it will always be reformed at a gentle pace”;69 and Donald Anderson stated that “one can assume that the CAP will be reformed over time”.70

104. Other evidence highlighted the importance of emphasising the role of environmental and rural development issues within the CAP, particularly in Scotland. HIE was of the view that the CAP has a critical role to play in supporting agriculture and, by extension, rural communities in Scotland’s most fragile areas.71

105. Scottish Natural Heritage (SNH) stated that—

“Scotland has the lowest level of spending per hectare of all of the 15 countries that made up the EU before the new member states joined. That bears no relation to the environmental value of the land that is being managed… the existing basis of distribution relates poorly, if at all, to the public benefit that agriculture delivers. This review gives us an opportunity to put that right.”72

106. SNH suggested that the EU budget was vital as far as natural heritage was concerned “because the CAP is the main policy that provides public funding for land management in Scotland which, in turn, is critical for natural heritage”.73 Scottish Environment LINK considered that EU funding streams were crucial to allowing Scotland to actively manage the environment, without which “we would lose considerable benefits in terms of biodiversity, water quality, landscape quality and so on”.74

107. Scottish Environment LINK called for a “sustainable land use policy to replace the CAP… the CAP missed the opportunity to take an integrated approach to the management of land… the Budget process gives us an opportunity to move towards a more sustainable land use policy”.75

108. As a possible option for reform of the CAP, evidence suggested redirecting funding from the current SFP-focused scheme (Pillar 1) to a system that recognised more clearly public benefit (‘public goods’), in the interests of encouraging better, more environmentally-friendly land management. Friends of the Earth Scotland strongly advocated a “greater cross-compliance with environmental objectives, especially climate change, to ensure climate-friendly land management and changes in agricultural practices to reduce emissions”.76 Friends of the Earth Scotland stated that—

“While we want money spent on rural land managers (farmers, foresters, others), it must be redirected to provide public goods (e.g. biodiversity, clean water, access, etc.) for public money.”77

109. Friends of the Earth Scotland 78 argued that under such a system, Scotland – with its many High Nature value (HNV) farming systems – could be a net beneficiary, even with lower total EU expenditure on the CAP. Scottish Environment LINK79 made a similar point.

110. SNH also supported a stronger emphasis on payment in return for public goods, with clearly defined outcomes. It suggested that one way of achieving this transformation would be to “move substantial (ultimately perhaps all) funding from Pillar 1 to Pillar 2”.80 Alternatively, SNH suggested a radical reform of Pillar 1 to “greatly improve its transparency and accountability”. However, if the CAP is to survive in more or less its present form, SNH strongly argued for an overall increase in funding of Pillar 2.

111. The NFUS supported the policy of reforming the CAP, but emphasised that in the current market scenario – where farm businesses cannot secure sustained, sufficient and stable returns for their produce – some form of support will be vital to secure farm business viability. The NFUS suggested that—

“The Scottish priority should be to look at greater flexibility to link support payments to the delivery of public goods through agricultural activity.

“In other words, a system of rolling, activity-driven support should be put in place; one that offers incentives for sustainable production.”81

112. Whilst the NFUS supported direct payments to farmers, it was clearly against a return to what it termed as “the market-distorting subsidy which encouraged production even when market signals said otherwise”.82 The NFUS83 and the Scottish Crofting Federation84 referred to the reduction in livestock and land abandonment as growing problems in Scotland and believed that Scottish agriculture had suffered as a result of the CAP. Instead, the NFUS suggested that support to farmers could be justified on the basis of “paying for the non-market goods that agriculture delivers in terms of environmental stewardship, contribution to food security objectives and the social role in underpinning many rural communities”.85

113. In relation to the Commission’s proposals contained in its draft communication, the NFUS86 recorded its concern that reducing the CAP budget had the potential to disproportionately affect rural areas in Scotland. It was also concerned that greater co-financing by member states of the agriculture sector could lead to “major distortions in support levels across Europe”. Such an environment of voluntary co-financing could, the NFUS said, result in “a major reduction in support and risk real harm to rural areas in Scotland”, potentially compounded by leaving Scottish farmers at a “massive disadvantage to their EU competitors”.

114. SNH suggested a need for greater emphasis on European spending on research and development and food security, proposing that this is the area in which significant advances will be needed and where public intervention can be justified.87

115. Other opportunities for Scotland relating to livestock farming were highlighted—

“One of the challenges in a climate change and carbon emissions context is livestock farming which is particularly important for Scotland. Scotland has an opportunity to build on the research base and take a lead in addressing the question of how we can make livestock farming less environmentally damaging in climate change terms. That must be apriority.”88

116. In relation to agriculture and the differences of view from the Scottish and UK perspective, Donald Anderson stated—

“It has long been the UK position that the common agricultural policy should be radically reformed and particularly that pillar 1—the direct payment pillar—should disappear. That approach not only forms part of general policy, but features heavily in trade negotiations, both at the Doha development round and in bilateral negotiations.

“Scotland's interests are unlikely to be served by that policy. In agriculture, Scotland has more in common with European countries that have a high agricultural component than it does with the metropolitan, industrial south. That is a potential difficulty. There are ways round it – we can think about using agricultural funding in regional policy and can relate it to cohesion in some way – but, at some point, we come down to the fact that the north, particularly the Highlands and Islands, will need for its agriculture support of a kind that, at the moment, is contrary to what the UK Government promotes.”89

117. Elspeth Attwooll also referred to the issue of regions with permanent geographical disadvantages. She suggested that—

“We should look at that in the context of the problem relating to agriculture and less favoured areas and regard it as an aspect of territorial cohesion and allowing the sustaining of traditional communities. How that would play out against what one wants to do with rural development funding and whether it should be merged with regional development funding, I am not so sure.”90

118. Elspeth Attwooll also highlighted the importance of fisheries, which in her view had been slightly forgotten, and stated that—

“[…] with the development of the directorate-general for maritime affairs and fisheries – DG MARE as opposed to DG Fish – and the amount of pressure for marine protected areas, we need to consider that aspect of funding quite closely, too.”91

119. In Scotland, the CAP element of the EU budget provides an important source of income and support to farmers. However, the Committee agrees with much of the evidence received that the CAP must continue to be reformed in a way that maximises the potential for Scotland.

120. As part of the reform programme, the Committee emphasises the need to consider the socio-economic and environmental impact of the CAP, particularly on rural communities and agriculture-related industries. In addition, the Committee considers that the criteria used for allocation of CAP funding should take account of geographical disadvantages, such as peripherality and population sparsity. On this basis, the Committee supports a holistic approach to reforming the CAP, which recognises that farmers play an important role in the wider environment and, as such, should continue to receive some level of financial support from the EU, possibly on grounds of general land management and the supply of public goods. The Committee recommends that the Scottish Government promotes these considerations in future discussions on the CAP.

121. In relation to fisheries, the Committee recognises that the impact of the reform of the Common Fisheries Policy (CFP) will have a proportionately greater impact on Scotland compared to the rest of the UK. Thus, in terms of the EU budget review, the Committee highlights the importance for Scotland of this policy area.

122. The Committee recommends that the Scottish Government supports continuing CAP and fisheries funding coming to Scotland in its discussions with the UK Government.

123. In 2009, the Committee identified the upcoming CAP and CFP reforms as having particular significance for Scotland. The Committee encourages the Scottish Parliament’s Rural Affairs and Environment Committee to continue to engage, as agreed, on these issues.

Structural funds

124. Structural funds make up approximately one third of the EU budget and the Committee heard evidence which indicated there was likely to be tensions around the size and distribution of structural funding in the context of the EU budget debate.

125. The Committee heard that there is much debate about whether the EU regional policy should cover disadvantaged areas in all member states or should only be targeted at those areas in the least wealthy member states. Stephen Quest, from the Commission, stated that—

“It is a difficult debate. It has been argued that it is of interest at European Union level for there to be solidarity between the richer and the poorer member states. It therefore makes sense – and it fits with the treaty – that there should be a flow of money from the richer to the poorer member states to help poorer regions and countries to catch up. In that sense, there is less of a case for flows of money to richer member states and to regions in richer member states, although that is currently the way in which the system works.

“A question that has been asked is, "What is the balance between the flow of money to the poorer regions in the poorer member states and the flow of money to richer regions?" That issue will be a red thread that runs throughout the process until the next financial framework is agreed. It is clear that it will be an area of discussion and a potential source of tension. We will have to get to grips with the issue.”92

126. Similarly, Scottish Enterprise referred to the spectrum of opinion that exists on the regional policy debate “from the UK view, which is that regional policy should be repatriated, to the German view, which is that regions in even the richest member states should continue to be supported”.93

127. HIE94 highlighted this as a “key budget debate” and suggested that regional policy has “contributed significantly to development in Scotland with the Highlands and Islands in particular having benefited from successive periods of structural fund support”. HIE noted that sparsity of population and lack of agglomeration of businesses and universities in the Highlands and Islands can mean that it costs more and can take longer to kick-start development.

128. On this basis, HIE advocated that—

“[…] the principles of territorial cohesion outlined by the EU and the Scottish Government’s own principle of equity are best served by a regional policy which targets disadvantaged regions across the whole of Europe, even in the wealthier nations.”95

129. Stephen Quest acknowledged that nations were not necessarily exclusively rich; they could include poor areas. He indicated that there was much discussing and negotiating to be done, but highlighted one line of discussion about whether “we should consider levels of national wealth or focus more on regional or even sub-regional wealth levels and target funds more precisely on regions that most need support”.96

130. In a position paper submitted to the Committee, the Industrial Communities Alliance (ICA) noted that the current round of EU structural funding expires at the end of 2013 and, as such, a new funding structure will need to be agreed from 2014. The ICA highlighted that Alliance areas97 in Scotland, England and Wales had traditionally been some of the main beneficiaries of EU structural funding in the past. It further suggested that, “as industrial areas that have suffered major job losses over the years, Alliance member authorities nearly all face continuing problems of economic adjustment and regeneration.”98 The ICA, therefore, called for a budgetary emphasis on regional development.

131. The STUC highlighted the importance of structural funds in helping to retrain people for the challenges that they face in the context of the current economic situation. The STUC also referred to the impact that EU regional policy could have on the enhancement of productivity across the EU—

“[…] if our approach focused only on the poorest member states, we would miss great opportunities, such as developing the renewable energy sector in the rural and peripheral parts of Scotland, where EU funds are important.”99

132. Both HIE100 and the STUC101 highlighted the concern that the Commission’s non-paper on the EU budget review, which emerged in October 2009, did not refer to regional policy below member-state level.

133. In other evidence, witnesses highlighted that a different vision for cohesion policy had been articulated through, for example, the Barca report, Danuta Hübner’s reflection paper and in the orientation paper by Pawel Samecki. Professor Bachtler described this vision as “a much more ambitious agenda for cohesion policy, as it regards it as an important delivery mechanism for key EU priorities”.102

134. Professor Bachtler described the emerging debate about the future of territorial cohesion funding as having three aspects—

“[…] the strategic aspect is how we ensure a more coherent approach to co-ordinating and planning policies to take into account different territorial characteristics; the analytical approach involves understanding better the territorial impact of policies; and the operational dimension is the question of what we might spend money on.”103

135. Elspeth Attwooll agreed and concluded that “in talking about territorial cohesion we are talking about allowing areas to maximise their advantages and minimise their disadvantages”.104

136. SNH expressed concern about the suggestion in the non-paper that some rural development elements could be stripped away from rural development funding programmes and reintegrated with cohesion or structural funding. It suggested that such a move would be in the wrong direction and argued that—

“With its more integrated approach, the Scottish Rural Development Programme is taking us in the right direction, but obviously we need to ensure that the measures reflect current policy priorities, particularly in climate change mitigation and adaptation.

“We should continue to work on the Scottish Rural Development Programme rather than abandon it and take the criticism that there has been as a sign that it is not a productive approach. It is a good approach and we need to stick with it.”105

137. Professor Bachtler suggested that Scotland could lose funding in the areas of cohesion funding and rural development support. He acknowledged that there were challenges in that Scottish policy initiatives and organisations have come to depend on these funding streams.106

138. Professor Bachtler discussed how projects that were designed to fulfil the EU’s objective in lifelong learning, innovation support and enterprise development might be funded in the future. He suggested that—

“The regional policy interests in Brussels are arguing that cohesion policy is an ideal vehicle for taking account of territorial differences across the EU and ensuring that EU objectives can be delivered in a place-specific way that takes account of territorial characteristics.”107

139. Professor Bachtler suggested that if structural funds were cut back and funding was allocated under other policy headings, the issue of how the money would be spent remains and strategic and territorial issues would need to be addressed. He argued that there must be a system for allocating funding and implementing it. He considered that any major spending area “would probably have to have a territorial allocation ex ante” although he thought that there would also be a greater element of competition.108

140. Professor Scott also highlighted concerns in relation to future funding for Scotland—

“[…] I think that our eligibility under the old territorial criteria will fall, so we may have to consider things afresh… we have to see where in Scotland we can make the most of the competitiveness agenda that the Commission is pushing. Territoriality may or may not be consonant with that – we must think carefully about it.”109

141. Considerations of the performance of funding were highlighted by Professor Bachtler who suggested that the key question is what kind of conditions will be attached to funding in the future? He stated—

“The non paper and all the documents on the structural funds that were published this year – from Barca, Hubner and Samecki-refer to engineering or trying to get greater performance from the funding that is administered. That suggests quite a precise interpretation of how countries or regions contribute to EU objectives in a way that allows for clear evidence of progress.”110

142. The Committee strongly supports the sub-national approach of EU regional policy and believes that whilst proportionately more support should go to less wealthy member states, regional policy should target disadvantaged areas in all EU member states. The Committee recommends that the Scottish Government adopts this position.

143. Given the likely reduction of regional funding coming to Scotland, the Committee recognises that Scotland will need to ensure that it is well-placed to benefit from other funding streams, such as the Framework Programme for research and development, and that Scottish organisations that have become reliant on EU regional funding are primed to be able to successfully navigate any transition period. The Committee recommends that the Scottish Government ensures that Scottish organisations are aware of any changes to the EU funding streams and are able to position themselves in order to benefit from future funding.

Climate change and energy

144. The Commission’s non-paper referred to climate change and challenges related to sustainable energy supply as two of the key priorities for the EU budget reform in the public consultation. The paper included climate and energy as one of its ‘priority axes’ and proposes integrating the relevant direct spending for climate change and energy policies within a European Framework Programme for Climate Change and Energy. To ensure this mainstreaming, the paper suggested that “cohesion and CAP expenditure should be ‘climate proofed’ and linked to the achievement of national emission targets”.111

145. Overall, the evidence received by the Committee emphasised the view that Scotland is well placed to take advantage of the EU’s focus on climate change and energy. For example, the RSE stated that “policy makers at Scottish, UK and EU levels must understand the substantial contribution that Scotland can make in respect of its potential in offshore wind, tidal and wave energy resources”.112 The RSE argued that for Scotland’s potential and aspirations to be realised they must be linked in to wider UK and European energy markets, and Scotland—

“[…] should therefore engage with the discussions about a possible European energy transmission and supply network, an “intelligent network” that would draw on generating capacity wherever it occurs so as to minimise emissions and cost and maximise energy security.”113

146. SEGEC suggested that a “genuinely pan-European energy infrastructure will be key to the achievement of the EU’s renewable energy and CO2 storage targets”.114

147. SEGEC highlighted the challenge of developing a low-carbon economy as being of particular significance to Scotland. It stated that “the scale of the development and deployment challenge to make CCS, offshore renewables and offshore grid projects viable” and suggested that “Scotland would be unable to fund such investments domestically without substantial European co-financing”.115

148. SEGEC believed, however, that Scotland has advantages and expertise in the low-carbon energy sector. It suggested that Scotland has substantial natural resources in terms of offshore renewables – wind, wave and tidal energy – and has advanced research stations including the European Marine Energy Test Centre in Orkney and the proposed European Offshore Wind Deployment Centre, off the coast of Aberdeen.116

149. Similarly, HIE suggested that “Scotland and the Highlands and Islands has considerable potential to take the lead in development, testing and commercial application of renewable energy technologies”. HIE also considered that targeted EU funding was necessary to drive this research and development activity; to support collaboration and co-operation; and to support infrastructure development.117

150. In terms of the Commission’s approach, Scottish Renewables “welcomed the principles behind the Commission’s thinking about integrating climate and energy objectives over a wide range of policies, such as research, cohesion, agriculture and rural development”. However, it noted caution in that “the devil is in the detail and further work is required to be able to comment on how this will work in practice for renewable energy companies working in Scotland and across Europe”.118

151. Friends of the Earth Scotland highlighted concerns about climate justice and the need for very large financial flows from Europe to less-developed countries to deal with migration of and adaptation to climate change. It considered that “if one thing needs to be increased in the European budget it is that flow of support”.119

152. The Committee welcomes the Commission’s recognition that climate change and energy considerations are critical issues for Europe. The Committee wishes to emphasise the substantial opportunities for Scotland which lie in the measures for combating climate change and in the development of more renewable forms of energy. The Committee, therefore, would support proposals to increase the proportion of the EU budget focused on climate change and energy. The Committee recommends that the Scottish Government continues to promote Scotland’s interests in these areas and that it ensures that Scotland’s eligibility as a recipient of associated EU funding is maximised.

153. The Committee also acknowledges the comments made in evidence about the need to ensure that levels of financial support flow from Europe to less-developed countries to help combat climate change. The Committee wishes to emphasise that such support should supplement the support funding that those less-developed countries already receive.

Research, development and innovation

154. In the evidence received there was strong support for an increase in EU support for research and innovation across Europe. It was considered that Scotland had significant expertise in this field and could benefit from such a policy emphasis in the future EU budget.

155. Universities Scotland stated that—

“[…] research and innovation] is a fundamental area for investment if Europe is to move towards being a knowledge economy and to creating employment by leading in development and exploitation of ideas. The non-paper [the Commission’s draft communication] sets a stretching and ambitious target, which is that 3 per cent of gross national income should be devoted to research… At the moment, the figure for Scotland is about 1.5 per cent; the aggregate figure for investment at both UK and EU levels is about 1.8 per cent.

“Scotland is very well placed to benefit from increased emphasis on investment in research and innovation. At the moment, Scotland and the UK do well when competing for EU-level research funding—the UK manages to access about 20 per cent of European Research Council funding—because there is depth of excellence in higher education at UK and Scotland levels and because we have distinctive research strengths in areas such as renewable energy, about which we have already heard, and biotechnology.”120

156. The STUC agreed that the focus on research and development in the European Commission draft communication should be welcomed.121 HIE made a similar point and viewed innovation, research and development as a key driver of economic growth.122

157. The RSE highlighted that, “whilst the bulk of public funding for research should remain with national and regional bodies, the EU can add value by ensuring mutual transparency and co-ordination”.123 It argued for efforts to be made to realise the full potential of the European Research Council—

“[…] which shows signs of galvanising the European research effort and at last is a recognition that in a globalised economy, peerless research excellence is one of the prerequisites for powerful technological innovation. There should be a decisive shift of funding within the Framework Programme towards the ERC.”124

158. The RSE highlighted the link between exploiting Scotland’s research base and securing long-term innovation in Scotland. The RSE stated that—

“It is vital that innovation is prioritised in the EU Budget, but it is also vital that effective innovation policies are supported with focus on long term support to emergent technology areas where there are large global markets, where Europe (and Scotland) has world-leading research and where there are companies able to take innovations to the market.”125

159. SEGEC highlighted the importance of technological innovation, which it believed would “be crucial to help our universities through the research pools, such as the Energy Technology Partnership, to continue to participate in EU-wide research and development.”126 In this context, SEGEC believed that a greater focus on demonstration would play to Scotland’s advantages—

“[…] where we already have the European Marine Energy Test Centre in Orkney, and the proposed European Offshore Wind Deployment Centre off-Aberdeen. This should be followed by a European Offshore Carbon Storage Test Centre in the North Sea, cementing Scotland’s natural endowments for marine, offshore wind and CCS demonstration.”127

160. The Committee agrees with the evidence it has received during the inquiry which emphasised that Scotland, with its world-leading research industry, has a significant contribution to make in this field.

161. The Committee considers that it is vital that the research and development and innovation is prioritised as a source of European Union spending and, specifically, that there is a focus on supporting long-term emerging technologies. The Committee considers that such a focus will be vital to ensuring economic growth in Europe in the coming decade, as set out in the Europe 2020 strategy.

162. In addition, the Committee calls on the Scottish Government to raise awareness of the Framework Programme (as a possible source of EU funding), to seek to increase participation of Scottish organisations, and to maximise the benefits for Scotland. The Committee welcomes the Scottish Government’s commitment to engage in the forthcoming reform of the EU research budget and requests that the Committee be kept informed of the Government’s work in ensuring that Scottish interests are well-represented in the future negotiations at UK and EU levels.

THE ROLE OF SCOTLAND IN EU POLICY-MAKING

163. In the context of the EU budget, Dr Zuleeg suggested that there was a specific role for the Scottish Parliament in clarifying the policy objectives that it expects the European Union will have to address as a matter of priority, and to set out its view of the budget that might need to be attached to those priorities at EU level. On this basis, he considered that the “reform process cannot come from the top down; it must come from the bottom up” and it “must be built up from the regions, civil society and all the actors in Europe”.128

164. Other evidence highlighted the key organisations that Scotland could and should be seeking to engage with in order to influence EU policy generally and the debate on the EU budget specifically. There was agreement that, in the context of the Treaty of Lisbon and the consequent enhancement of the European Parliament’s powers of co-decision, there was increased value in engaging directly with MEPs. Elspeth Attwooll considered that, as a result, the Parliament was—

“[…] in effect, equal to the Council of Ministers in its budgetary authority, and it has gained the same level of influence over regulations that govern regional funding and agriculture and fisheries.”129

165. Donald Anderson suggested that there was scope for a more constructive engagement, particularly with the Scottish MEPs, and that that “should be considered proactively and as a priority”.130

166. In addition, Elspeth Attwooll131 endorsed the view that “it is well worth keeping in touch with the Committee of the Regions”. She also highlighted that there are many other organisations which are well-placed to influence EU policy, such as the North Sea Commission, the Conference of Peripheral Maritime Regions of Europe (CPMRE), Euromontana and Eurocities.

167. Professor Scott, however, considered that Scotland should look closer to home for the most effective way of influencing the EU – through the UK, as Scotland’s member state representative. He stated that—

“The Committee of the Regions is an advisory body, and I am highly sceptical about whether its advice is ever taken in the Berlaymont building [the European Commission]. That is not to say that it is not an important pressure point and lobby group, but it is not part of the legislature.

“On who one's friends are, there are other regions in the UK, too. Regardless of the importance of the Committee of the Regions or the CPMR, the fundamental actor is the member state. If this Parliament –or indeed Scotland – can speak with one voice on these matters to its member state, perhaps in concert with other parts of the UK, that will matter much more as you get to the end of the negotiations. I say with no disrespect that that will matter more than making common cause – important though that may be – with other regions throughout the EU.”132

168. In relation to engaging with the UK, Donald Anderson stressed that, in considering the issues surrounding the EU Budget Review, the RSE was “struck by the severe constitutional limitation that Scotland faces in influencing the EU budget – or, indeed, other EU matters.” He argued that “the Scots can influence the UK position only if their interests are roughly coherent with each other”.133 As discussed at paragraphs 99-123, whilst the RSE considered that Scotland’s perspective differed from that of the UK in relation to agriculture, other witnesses did not necessarily consider this to be the case.

169. The Committee notes the evidence to the inquiry that highlighted the important role that Scotland and the Scottish Parliament has in defining what it considers to be the priorities for any future EU budget. The Committee believes that a coherent Scottish approach is the best and most effective approach to ensuring this is achieved.

170. The Committee supports the view that wider engagement at EU level is important, especially in the context of institutional changes provided for under the Treaty of Lisbon. To this end, the Committee will seek to engage with Scottish stakeholders, Scottish parliamentary committees and the wide range of EU actors in the furthering of its EU strategy.

Annexe A: EXTRACTS FROM THE MINUTES OF THE EUROPEAN AND EXTERNAL RELATIONS COMMITTEE

5th Meeting, 2007 (Session 3), Tuesday 2 October 2007

4. Scottish Government’s European Union priorities: The Committee considered and agreed the recommendations in a paper by the Clerk.

7th Meeting, 2007 (Session 3), Tuesday 13 November 2007

3. EU budget review: The Committee considered and agreed a paper from the Clerk.

2nd Meeting, 2008 (Session 3), Tuesday 22 January 2008

3. EU budget review: The Committee considered correspondence from the Scottish Government and agreed a paper by the Clerk.

3rd Meeting, 2008 (Session 3), Tuesday 5 February 2008

2. EU budget review: The Committee took evidence from—

John Bachtler, Professor of European Policy Studies, University of Strathclyde

5th Meeting, 2008 (Session 3), Tuesday 4 March 2008

3. EU Budget Review: The Committee considered correspondence from the Scottish Government and agreed a paper from the Clerk.

13th Meeting, 2008 (Session 3), Tuesday 24 June 2008

2. EU Budget Review: The Committee took evidence from—

Gary Titley MEP, North West England

14th Meeting, 2008 (Session 3), Tuesday 9 September 2008

8. EU Budget Review Inquiry (in private): The Committee agreed its approach to its inquiry into the EU Budget Review.

17th Meeting, 2008 (Session 3), Tuesday 4 November 2008

2. EU Budget Review inquiry: The Committee took evidence from—

Professor Iain Begg, European Institute, London School of Economics.

5. EU Budget Review inquiry (in private): The Committee considered the key themes arising from the evidence session with Professor Iain Begg and invited the Clerk to bring forward a paper at its next meeting.

19th Meeting, 2008 (Session 3), Tuesday 2 December 2008

5. EU Budget Review inquiry: The Committee considered a report back on a European Commission conference on the EU Budget Review.

6. EU Budget Review inquiry (in private): The Committee agreed its approach to taking oral evidence as part of the inquiry.

2nd Meeting, 2009 (Session 3), Tuesday 27 January 2009

3. EU Budget Review inquiry: The Committee took evidence, in a video conference, from—

Dr Fabian Zuleeg, Senior Policy Analyst, and Dr Sara Hagemann, Policy Analyst, European Policy Centre.

4. EU Budget Review inquiry: The Committee considered written evidence received in response to the Call for Evidence.

8. EU Budget Review inquiry (in private): The Committee considered the key themes arising from the evidence session.

3rd Meeting, 2009 (Session 3), Tuesday 3 February 2009

1. EU Budget Review inquiry: The Committee took evidence, via video conference, from—

James Elles MEP, South East of England, and Bill Newton Dunn MEP, East Midlands;

Stephen Quest, Head of Cabinet, Cabinet of Dr Dalia Grybauskaite Commissioner for Financial Programming and Budget, and Jennifer Brown, Deputy Head of Unit responsible for budgetary procedures and synthesis, European Commission.

3. EU Budget Review inquiry (in private): The Committee considered the key themes arising from the evidence sessions and agreed;

  • that the first phase of its inquiry was complete and that it would not proceed, therefore, with the third evidence session at this stage;
  • to invite the Clerks to bring forward a paper setting out the key themes arising from the previous two sessions.

10th Meeting, 2009 (Session 3), Tuesday 16 June 2009

6. EU Budget Review inquiry (in private): The Committee agreed its approach to Phase Two of the inquiry.

11th Meeting, 2009 (Session 3), Tuesday 29 September 2009

7. EU Budget review inquiry (in private): The Committee agreed its approach to taking oral evidence in relation to its inquiry.

13th Meeting, 2009 (Session 3), Tuesday 17 November 2009

3. EU Budget review inquiry: The Committee took evidence from—

Duncan McLaren, Chief Executive, Friends of the Earth Scotland;

Allan Bowie, Vice President, National Farmers Union Scotland;

Patrick Krause, Chief Executive, Scottish Crofting Federation;

Jonathan Hughes, Director of Conservation with Scottish Wildlife Trust, Scottish Environment LINK;

Prof Paul Mitchell, Board Member, Scottish European Green Energy Centre, University of Aberdeen;

John Thomson, Director of Strategy and Communications, Scottish Natural Heritage;

Rob Clarke, Head of International Development, Highlands and Islands Enterprise;

Donald MacInnes, Chief Executive of Scotland Europa, Scottish Enterprise;

Stephen Boyd, Assistant Secretary, STUC; and

Alastair Sim, Director, Universities Scotland.

14th Meeting, 2009 (Session 3), Tuesday 15 December 2009

2. EU Budget review inquiry: The Committee took evidence from—

Elspeth Attwooll;

Prof John Bachtler, Professor of European Policy Studies; Director, European Policies Research Centre, University of Strathclyde;

Prof Andrew Scott, Professor of European Union Studies, and Donald Anderson FRSE, International Trade and Economic Affairs Consultant, Royal Society of Edinburgh.

6. EU Budget review (in private): The Committee considered the key themes arising from the evidence session and agreed to consider a paper from the Clerk at a future meeting. The Committee also agreed to invite the Scottish Government to give evidence to the Committee following publication by the European Commission of its final proposals on the EU budget.

4th Meeting, 2010 (Session 3), Tuesday 16 March 2010

7. EU Budget Review inquiry (in private): The Committee agreed to consider its position on the key issues raised in evidence at a future meeting in April 2010. The Committee also agreed to report its findings to the Scottish and UK Governments and to the EU institutions ahead of the European Commission's communication, which is expected to be published in July or September 2010.

6th Meeting, 2010 (Session 3), Tuesday 20 April 2010

5. EU Budget Review inquiry (in private): The Committee considered the key issues arising from evidence received and agreed that the Clerks should prepare a draft report for consideration by the Committee at a future meeting. The Committee also agreed to monitor the EU Budget and the Multi-Annual Financial Framework (MAFF), and the Scottish Government's engagement in these processes; and to consider options for further work in relation to the EU Budget once the Scottish Government has responded to the Committee's report.

8th Meeting, 2010 (Session 3), Tuesday 1 June 2010

6. EU Budget review (in private): The Committee agreed its report subject to a number of specified changes being made, and to delegate authority to the Convener to arrange publication, to make any minor typographical changes and to issue a press notice.

Annexe B: ORAL EVIDENCE

5 february 2008

24 June 2008

4 November 2008

27 January 2009

3 February 2009

17 November 2009

15 December 2009

Annexe c: WRITTEN EVIDENCE

The following written evidence was submitted to the Committee—

  • Aquamarine Power Ltd
  • Convention of Scottish Local Authorities (COSLA)
  • European Policy Centre
  • Friends of the Earth Scotland
  • Professor Iain Begg, European Institute, London School of Economics
  • Industrial Communities Alliance
  • National Farmers Union Scotland (NFUS)
  • Royal Society of Edinburgh
  • Scottish Enterprise
  • Scottish Environment LINK
  • Scottish European Green Energy Centre (SEGEC)
  • Scottish Natural Heritage (SNH)
  • Scottish Renewables
  • Scottish Rural Property and Business Association
  • Scottish Trades Union Congress (STUC)
  • Gary Titley MEP
  • Universities Scotland
  • West of Scotland European Forum

All written evidence received to the Committee’s inquiry is available on the Scottish Parliament’s website at—

http://www.scottish.parliament.uk/s3/committees/europe/inquiries/euDirectives/BudgetReview_evid.htm


Footnotes:

1 Reforming the Budget, Changing Europe: A Public Consultation Paper in View of the 2008/2009 Budget Review (12 September 2007), page 9

2 Extract from the Note of the Council of the European Union (15-16 December 2005), paragraphs 79-80

3 Reforming the Budget, Changing Europe: A Public Consultation Paper in View of the 2008/2009 Budget Review (12 September 2007):http://ec.europa.eu/budget/reform/library/issue_paper/consultation_paper_en.pdf
See also the European Commission webpage: http://ec.europa.eu/budget/reform/index_en.htm

4 Reforming the Budget, Changing Europe: A Public Consultation Paper in View of the 2008/2009 Budget Review (12 September 2007), page 2

5 On 12 November 2008, the Commission organised a conference that brought together participants from across Europe to discuss the input received to the public consultation on the EU budget review. It was envisaged that the conference would provide an opportunity for dialogue on the future of EU finances and that this would assist the Commission as it prepared its report on the budget review.

6 European Commission webpage: http://ec.europa.eu/budget/reform/index_en.htm

7 A ‘non-paper’ is terminology often used to describe an early draft of Commission thinking. The non-paper on the EU budget review, as it appeared, is available on the Parliament’s website at:http://www.scottish.parliament.uk/s3/committees/europe/inquiries/euDirectives/documents/EU_BudgetReview_CommissionNonPaper.pdf

8 European Commission non-paper, pages 5-7

9 Scottish Parliament European and External Relations Committee. Official Report, 18 September 2007, Cols 62-80

10 Scottish Government Key EU Political Objectives, September 2007

11 Scottish Government Action Plan on European Engagement (published in September 2009):
http://www.scotland.gov.uk/Topics/Government/International-Relations/Europe/EuropeanStrategy

13 Scottish Parliament European and External Relations Committee. Official Report, 3 February 2009, Col 1010

14 Scottish Parliament European and External Relations Committee. Official Report, 3 February 2009, Col 1012

15 Scottish Parliament European and External Relations Committee. Official Report, 15 December 2009, Col 1307

16 Scottish Parliament European and External Relations Committee. Official Report, 15 December 2009, Col 1316

17 Scottish Parliament European and External Relations Committee. Official Report, 15 December 2009, Col 1315

18 Scottish Parliament European and External Relations Committee. Official Report, 27 January 2009, Col 982

19 Scottish Parliament European and External Relations Committee. Official Report, 27 January 2009, Col 991

20 COSLA. Written submission to the Scottish Parliament European and External Relations Committee.

21 Scottish Parliament European and External Relations Committee. Official Report, 3 February 2009, Col 1010

22 Scottish Parliament European and External Relations Committee. Official Report, 3 February 2009, Col 1011

23 Scottish Parliament European and External Relations Committee. Official Report, 3 February 2009, Col 1012

24 European Commission non-paper, page 5

25 European Commission non-paper, page 6

26 Scottish Parliament European and External Relations Committee. Official Report, 27 January 2009, Cols 981-2

27 Scottish Parliament European and External Relations Committee. Official Report, 4 November 2008, Col 868

28 Scottish Parliament European and External Relations Committee. Official Report, 3 February 2009, Col 1000

29 Reforming the Budget, Changing Europe: A Public Consultation Paper in View of the 2008/2009 Budget Review (12 September 2007), page 9

30 Scottish Parliament European and External Relations Committee. Official Report, 4 November 2008, Col 873

31 Scottish Parliament European and External Relations Committee. Official Report, 4 November 2008, Col 873

32 Scottish Parliament European and External Relations Committee. Official Report, 3 February 2009, Col 1014

33 Scottish Parliament European and External Relations Committee. Official Report, 27 January 2009, Col 988

34 Scottish Parliament European and External Relations Committee. Official Report, 27 January 2009, Cols 988-9

35 Scottish Parliament European and External Relations Committee. Official Report, 3 February 2009, Col 1015

36 Scottish Parliament European and External Relations Committee. Official Report, 4 November 2008, Col 874

37 Scottish Parliament European and External Relations Committee. Official Report, 3 February 2009, Col 1015

38 Scottish Parliament European and External Relations Committee. Official Report, 27 January 2009, Col 983

39 Scottish Parliament European and External Relations Committee. Official Report, 4 November 2008, Col 964

40 Scottish Parliament European and External Relations Committee. Official Report, 15 December 2009, Col 1321

41 Scottish Parliament European and External Relations Committee. Official Report, 15 December 2009, Col 1326

42 Scottish Parliament European and External Relations Committee. Official Report, 15 December 2009, Col 1308

43 SEGEC. Written submission to the Scottish Parliament European and External Relations Committee.

44 Scottish Parliament European and External Relations Committee. Official Report, 3 February 2009, Col 1007

45 COSLA. Written submission to the Scottish Parliament European and External Relations Committee.

46 Scottish Parliament European and External Relations Committee. Official Report, 3 February 2009, Col 1008

47 Scottish Parliament European and External Relations Committee. Official Report, 15 December 2009, Col 1325

48 Scottish Parliament European and External Relations Committee. Official Report, 3 February 2009, Col 1016

49 Scottish Parliament European and External Relations Committee. Official Report, 3 February 2009, Col 1017

50 Scottish Parliament European and External Relations Committee. Official Report, 3 February 2009, Col 1016

51 Scottish Parliament European and External Relations Committee. Official Report, 17 November 2009, Col 1295

52 Scottish Parliament European and External Relations Committee. Official Report, 17 November 2009, Col 1295

53 Scottish Parliament European and External Relations Committee. Official Report, 17 November 2009, Col 1295

54 COSLA. Written submission to the Scottish Parliament European and External Relations Committee.

55 European Commission non-paper, page 7

56 Scottish Parliament European and External Relations Committee. Official Report, 15 December 2009, Col 1312

57 Scottish Parliament European and External Relations Committee. Official Report, 3 February 2009, Col 1010

58 Scottish Parliament European and External Relations Committee. Official Report, 15 December 2009, Col 1308

59 Scottish Parliament European and External Relations Committee. Official Report, 15 December 2009, Col 1310

60 Scottish Parliament European and External Relations Committee. Official Report, 15 December 2009, Col 1311

61 Scottish Parliament European and External Relations Committee. Official Report, 15 December 2009, Col 1313

62 Scottish Parliament European and External Relations Committee. Official Report, 27 January 2009, Col 984

63 NFUS, Written submission to the European and External Relations Committee

64 Scottish Parliament European and External Relations Committee. Official Report, 27 January 2009, Col 987

65 Scottish Parliament European and External Relations Committee. Official Report, 3 February 2009, Col 1004

66 Scottish Parliament European and External Relations Committee. Official Report, 15 December 2009, Col 1316

67 Scottish Parliament European and External Relations Committee. Official Report, 4 November 2008, Col 867

68 Scottish Parliament European and External Relations Committee. Official Report, 27 January 2009, Col 984

69 Scottish Parliament European and External Relations Committee. Official Report, 4 November 2008, Col 874

70 Scottish Parliament European and External Relations Committee. Official Report, 15 December 2009, Col 1316

71 HIE. Written submission to the Scottish Parliament European and External Relations Committee.

72 Scottish Parliament European and External Relations Committee. Official Report, 17 November 2009, Col 1276

73 Scottish Parliament European and External Relations Committee. Official Report, 17 November 2009, Col 1271

74 Scottish Parliament European and External Relations Committee. Official Report, 17 November 2009, Col 1272

75 Scottish Parliament European and External Relations Committee. Official Report, 17 November 2009, Col 1277

76 FoES. Written submission to the Scottish Parliament European and External Relations Committee.

77 FoES. Written submission to the Scottish Parliament European and External Relations Committee.

78 FoES. Written submission to the Scottish Parliament European and External Relations Committee.

79 Scottish Environment LINK. Written submission to the Scottish Parliament European and External Relations Committee.

80 SNH. Written submission to the Scottish Parliament European and External Relations Committee.

81 NFUS. Written submission to the Scottish Parliament European and External Relations Committee.

82 Scottish Parliament European and External Relations Committee. Official Report, 17 November 2009, Col 1278

83 Scottish Parliament European and External Relations Committee. Official Report, 17 November 2009, Col 1273

84 Scottish Parliament European and External Relations Committee. Official Report, 17 November 2009, Col 1273

85 NFUS. Written submission to the Scottish Parliament European and External Relations Committee.

86 NFUS. Written submission to the Scottish Parliament European and External Relations Committee.

87 Scottish Parliament European and External Relations Committee. Official Report, 17 November 2009, Col 1276

88 Scottish Parliament European and External Relations Committee. Official Report, 17 November 2009, Col 1277

89 Scottish Parliament European and External Relations Committee. Official Report, 15 December 2009, Col 1314

90 Scottish Parliament European and External Relations Committee. Official Report, 15 December 2009, Col 1318

91 Scottish Parliament European and External Relations Committee. Official Report, 15 December 2009, Col 1323

92 Scottish Parliament European and External Relations Committee. Official Report, 3 February 2009, Cols 1013-1014

93 Scottish Parliament European and External Relations Committee. Official Report, 17 November 2009, Cols 1291-2

94 HIE. Written submission to the Scottish Parliament European and External Relations Committee.

95 HIE. Written submission to the Scottish Parliament European and External Relations Committee.

96 Scottish Parliament European and External Relations Committee. Official Report, 3 February 2009, Col 1014

97 The ICA is made up of nearly 60 local authorities across nine regions. The ICA brings together two long established local authority groupings - the Coalfield Communities Campaign and Steel Action. It also includes former textile, shipbuilding and manufacturing areas.

98 ICA. Written submission to the Scottish Parliament European and External Relations Committee.

99 Scottish Parliament European and External Relations Committee. Official Report, 17 November 2009, Col 1293

100 Scottish Parliament European and External Relations Committee. Official Report, 17 November 2009, Col 1290

101 Scottish Parliament European and External Relations Committee. Official Report, 17 November 2009, Col 1290

102 Scottish Parliament European and External Relations Committee. Official Report, 15 December 2009, Col 1311

103 Scottish Parliament European and External Relations Committee. Official Report, 15 December 2009, Col 1317

104 Scottish Parliament European and External Relations Committee. Official Report, 15 December 2009, Col 1318

105 Scottish Parliament European and External Relations Committee. Official Report, 17 November 2009, Cols 1286-1287

106 Scottish Parliament European and External Relations Committee. Official Report, 15 December 2009, Col 1311

107 Scottish Parliament European and External Relations Committee. Official Report, 15 December 2009, Col 1320

108 Scottish Parliament European and External Relations Committee. Official Report, 15 December 2009, Col 1320

109 Scottish Parliament European and External Relations Committee. Official Report, 15 December 2009, Col 1321

110 Scottish Parliament European and External Relations Committee. Official Report, 15 December 2009, Col 1322

111 European Commission non-paper, pages 14-20

112 RSE. Written submission to the Scottish Parliament European and External Relations Committee.

113 RSE. Written submission to the Scottish Parliament European and External Relations Committee.

114 SEGEC. Written submission to the Scottish Parliament European and External Relations Committee.

115 SEGEC. Written submission to the Scottish Parliament European and External Relations Committee.

116 SEGEC. Written submission to the Scottish Parliament European and External Relations Committee.

117 HIE. Written submission to the Scottish Parliament European and External Relations Committee.

118 Scottish Renewables. Written submission to the Scottish Parliament European and External Relations Committee.

119 Scottish Parliament European and External Relations Committee. Official Report, 17 November 2009, Col 1274

120 Scottish Parliament European and External Relations Committee. Official Report, 17 November 2009, Col 1290

121 Scottish Parliament European and External Relations Committee. Official Report, 17 November 2009, Col 1300

122 Scottish Parliament European and External Relations Committee. Official Report, 17 November 2009, Col 1300

123 RSE. Written submission to the Scottish Parliament European and External Relations Committee.

124 RSE. Written submission to the Scottish Parliament European and External Relations Committee.

125 RSE. Written submission to the Scottish Parliament European and External Relations Committee.

126 SEGEC. Written submission to the Scottish Parliament European and External Relations Committee.

127 SEGEC. Written submission to the Scottish Parliament European and External Relations Committee.

128 Scottish Parliament European and External Relations Committee. Official Report, 27 January 2009, Col 991

129 Scottish Parliament European and External Relations Committee. Official Report, 15 December 2009, Col 1308

130 Scottish Parliament European and External Relations Committee. Official Report, 15 December 2009, Col 1313

131 Scottish Parliament European and External Relations Committee. Official Report, 15 December 2009, Col 1323

132 Scottish Parliament European and External Relations Committee. Official Report, 15 December 2009, Col 1321

133 Scottish Parliament European and External Relations Committee. Official Report, 15 December 2009, Col 1313