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ZY Item 50 Outer Hebrides Leader Programme

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ZY Item 50 Outer Hebrides Leader Programme SUSTAINABLE DEVELOPMENT COMMITTEE: 29 AUGUST 2012 AUDIT AND SCRUTINY COMMITTEE: 5 SEPTEMBER 2012 POLICY AND RESOURCES COMMITTEE: 6 SEPTEMBER 2012 OUTER HEBRIDES LEADER PROGRAMME Report by Director of Development PURPOSE OF REPORT To update the Comhairle on LEADER Innse Gall 2007-2013 and seek approval for a LEADER Programme 2014-2020 draft strategy. COMPETENCE 1.1 There are no legal constraints to the recommendations being implemented. 1.2 Financial provisions for the additional over-commitment and the advancement of grants, as detailed within the report, will be made available from the Comhairle’s LEADER budget. SUMMARY 2.1 LEADER is European Union funded and one of seven schemes within Scotland’s Rural Development Programme (SRDP) and aims to support small-scale innovative pilot projects, unique to a community. The LEADER Innse Gall Local Action Group (LAG) was awarded £3.26m of LEADER and Convergence funding in 2008 and Comhairle nan Eilean Siar, as lead partner, administers the LEADER Programme in the Outer Hebrides. The LAG met on 28 June 2012 to allocate the remainder of LEADER funding available under the current Programme, in a competitive final funding round for applications. 2.2 The Comhairle is asked to homologate a management decision to approve an over-commitment of £52,135.37, equating to 5.09% of the budget, to ensure that that the Programme spends all LEADER and Convergence funding fully - and to homologate the decision to enable advances of grant to applicants to be paid in certain circumstances. Further detail is provided in the Report. 2.3 Comprehensive details of a range of LEADER Programme audits and the review methods adopted are outlined in the Report. The Comhairle is asked to note these and be aware of the associated risks of the Programme not being administered and managed properly. 2.4 The LAG intends to carry out an evaluation of the current Programme to-date, in order to inform the development of a new draft local LEADER strategy 2014-2020 - which the Comhairle is asked to endorse – in addition to agreeing to act as Lead Partner once again, in the event that participation in a new LEADER Programme is desirable. RECOMMENDATIONS 3.1 It is recommended that the Comhairle agrees to: (a) note LEADER Innse Gall’s success in allocating Programme funding fully; (b) homologate the decisions of the Director of Development and the Director of Finance and Corporate Resources, in consultation with the Chief Executive, to allow advances of LEADER Grant and to underwrite an over-commitment of 5.09% of the Programme budget; (c) note the review methods undertaken by Audit Scotland and all other audit agencies – along with the potential risks to the Comhairle as a consequence; (d) conduct an evaluation the current Programme in advance of creating a future strategy; (e) support the Local Action Group in the preparation of a LEADER strategy to secure funding in the next Rural Development Programme - 2014-2020; and (f) continue to act as Lead Partner for the Outer Hebrides, as appropriate, if a new local LEADER Programme 2014-2020 is considered desirable. Contact Officer: Kathlene Macdonald, Outer Hebrides LEADER Co-ordinator, 211-285 Appendices: 1. LEADER Innse Gall – Geographical Funding Commitment 2. LEADER Innse Gall – List of Projects Approved Background Papers: LEADER Information-packs to be circulated to Members in advance. BACKGROUND 4.1 The LEADER Innse Gall (or Outer Hebrides LEADER) 2007-2013 Programme is part of Scotland’s Rural Development Programme (SRDP). In 2009 the LEADER Local Action Group (LAG) was awarded £3.26m of LEADER and Convergence funding to support small-scale innovative community-led projects. While a proportion of this funding was necessarily allocated to the administration and co-ordination of the local Programme - over £2.9m was awarded to 75 local projects between March 2009 and July 2012. Projects in all nine Comhairle Wards received funding and the distribution and detail of the awards are appended to this Report, both in graphic and tabular form. 4.2 All strategic decisions for LEADER Innse Gall are undertaken by the LEADER LAG, comprising representatives from a number of key agencies and organisations drawn from across the public, private and community/voluntary sectors. The current LAG Chairperson represents the Comhairle, as lead-partner, and is the Chairman of the Sustainable Development Committee. The LAG is the local Programme decision-making mechanism, though the Comhairle signed a Service Level Agreement (SLA) with the Scottish Government to manage the local Programmes - including the risk of financial administration. The LEADER Innse Gall staff team comprises the LEADER Co-ordinator and an Administrator, both based in Stornoway and a Uist-based Field Officer who oversees Uists and Barra projects. The Co-ordinator and Administrator posts are fixed- term to March 2014, with the Field Officer post being contracted until December 2012. 4.3 Though the Programme work will be ongoing throughout 2013 the Scottish Government has instructed all 20 Scottish LEADER LAGs to commit all allocated funding as soon as possible and then concentrate on encouraging projects to spend-and-claim - as there is a positive effect of this strategy on the Government’s financial statement to the EU. In common with LEADER clients, the Comhairle can only claim defrayed payments from the Scottish Government - therefore applicants are encouraged to spend and submit claims to the LEADER team on a regular basis, allowing the Comhairle to reclaim defrayed expenditure from the Scottish Government on a Quarterly basis. 4.4 Although the local Programme has ceased to accept new applications, due to all funding being fully allocated, the LEADER Innse Gall team will focus on monitoring, reporting and the financial management of all LEADER grants to projects going forward. Staff will also continue to manage the Rural Broadband Challenge Fund (RBCF) and to process LEADER claims from projects involved in the Outer Hebrides Community Energy Fund. LEADER (UNDER)SPEND AND PROGRAMME OVER-COMMITTMENT 5.1 It is essential that the Comhairle commits and spends its full LEADER and Convergence Scottish Government allocation, as failure to do so will almost-certainly result in negative implications with regard to the amount of similar funding the LAG may receive in future Programmes. From experience of previous LEADER Programmes and other grant schemes some projects will inevitably underspend. It is usually therefore imperative that Programme funding is over-committed to mitigate for this. Eighteen projects awarded LEADER funding totalling £309,628 have been fully completed to-date - reporting an average 3.09% underspend. 5.2 The LAG met on 28 June 2012 to allocate the remainder of LEADER funding available under the current Programme, in a competitive final funding round for applications. Within the limited funding available, all projects approved by the LAG could not be accommodated within the existing financial envelope. A modest level of over-commitment was sought subsequently, to ensure both that all the funding allocated was spent and claimed, whilst making a slight allowance for an expected forecasted underspend by approved projects. 5.3 Current LEADER recipients were asked recently whether they expected to incur an underspend. As predicted, a majority stated they would spend their allocated LEADER grant amount fully. However it was considered that clients feared that funding will be de- committed from them before their project ends if they answered in the affirmative. A further in-house exercise was subsequently undertaken to ascertain and forecast which approved / existing LEADER projects could reasonably be anticipated to underspend - which was evidence for the amount the Comhairle had been asked to underwrite as an over-commitment of LEADER. This exercise was undertaken by reviewing projects’ existing spend-and-claim profiles together with their monitoring reports. 5.4 Following discussions with both the Director of Development and Director of Finance and Corporate Resources it was agreed to underwrite £52,135 (5.09%) as a LEADER Programme over-commitment - to ensure that 100% of LEADER and Convergence funding allocated was fully spent. This allowed the LAG to approve one final project and ensure all funds are claimed from the Scottish Government by the end of the LEADER 2007-2013 programme. Failure to defray the Programme allocation fully may have negative implications as to the amount of funding allocated to the Outer Hebrides in the next Rural Development Programme 2014-2020. 5.5 The Comhairle is therefore asked to homologate the decision of the Director of Finance and Corporate Resources to approve an over-commitment of £52,135.37 - equating to 5.09% of funding allocated - to ensure the LEADER Innse Gall programme 2007-2013 maximises its spend to ensure minimal impact on future scheme allocations. ADVANCES OF LEADER GRANT TO APPLICANT GROUPS 6.1 As stated above, a degree of project underspend is normal and expected across a number of projects in any Programme, which should be taken into account. In addition, however LAGs, in consultation with their Lead Partner are required to take into account whether to allow beneficiaries to receive advance payments of LEADER grant from Scottish Government funds held by the Lead Partner in order to assist projects to either commence or complete successfully. 6.2 Due to unforeseen circumstances some LEADER project beneficiaries may have difficulty raising the finance to allow their project to commence - and LEADER grant can only be paid out on defrayed expenditure, which can cause cashflow issues for beneficiaries. The Scottish Government decided previously - per Article 9 of the ‘European Commission’s Regulation No 1974/2006’ - that a maximum of 30% of any LEADER grant approved could be advanced at the beginning of a project to assist beneficiaries with their cashflow. 6.3 In order to assist beneficiaries towards the end of their projects, and to avoid potential losses, LAGs can also grant an advance to a maximum of 15% of total project costs to enable claimants to pay the final 25% of their project costs and make a final claim.
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