Official Report: Minutes of Evidence

The Chairperson (Mr Swann): I welcome Dr Stephen Farry, Minister for Employment and Learning; Mr Derek Baker, permanent secretary; Mr Colin Jack, director of strategy in the European employment relations division; and Mr John Noble. Thank you very much for attending today. Minister, you will be aware of the concerns that the Committee has raised in regard to the European social fund application process to date. I have spoken to you on a number of occasions, and there has been correspondence going back and forward. In the letter that was sent to you following last week's meeting, we say that, as a Committee, we, unfortunately did not feel that John or Colin were able to address fully some of the major concerns that we have had with this process. That is why we asked for you to be in attendance today as the Minister responsible. Minister, thank you very much for attending. I take it that you have an opening statement.

Dr Farry (The Minister for Employment and Learning): Thank you, Chair, for the invitation to address the Committee. I will make some introductory remarks, and Derek will also make a few comments at the start from the perspective of being the Department's permanent secretary and also the accounting officer. My presence today alongside Derek and also Colin and John, who, I want to say, did put on record last week the perspective of the Department, is nonetheless an indication of our keenness to give confidence in the integrity of the process around the European social fund. I think that a number of myths and misunderstandings have emerged about what is happening or not happening in relation to the European social fund and how we are going about rectifying some of the concerns that have been raised. In that respect, we welcome the opportunity to clarify and set the record straight in this regard.

In terms of context, I think that it is worth noting that we are talking about a larger European social fund pot for Northern Ireland, some 20% larger than before. That does come in the context of what are quite serious public expenditure pressures, and we are seeing the Department, alongside others, having difficulties with its ability to continue funding programmes in the community and voluntary sector outside the context of the European social fund. I think that it is in that context that we are seeing increased demand for access to the fund.

Probably the first thing to set clear is that we are seeking to use the European social fund as strategically as we can and to maximise what can be done in partnership with the community and voluntary sector to achieve skills and employability outcomes. We recognise that the community and voluntary sector is, in many cases, better placed to deliver some outcomes than Departments can be directly, so we very much welcome an ongoing partnership with the sector. It is in that context that we are trying to focus more on the delivery of level 1 in the community and voluntary sector in recognition of where we believe the greatest advantage lies. At the same time, we are also seeking to withdraw other aspects of work that we are doing in level 1, allowing core departmental funding to be focused elsewhere. That way, perhaps, we have a stronger division of labour.

I want to be very clear that we are not seeking to use the European social fund to plug gaps in core departmental funding, but, where we are seeing a situation where the community and voluntary sector was previously funded through departmental funding, which, sadly, is coming to an end, some of that work may well be displaced into the European social fund, for example, the work under the collaboration and innovation fund under the NEET strategy or the local employment intermediary service (LEMIS).

If anything, probably the biggest issue that concerns me in relation to the European social fund at this stage is how we are going to get the match funding. That is probably going to be a discussion for another day, but there is a requirement for organisations to have 35% funding outside the context of the European social fund and the Department. That will be a challenge in the current public sector round. We have made provision within our Department to fund the 25%.

I also want to make very clear that we are talking here about European Union money, and the rules on accountability in that respect are not always set by us locally in Northern Ireland. We are operating to the requirements that the European Commission sets down. There are a number of notable changes in that regard that are working through the current round of European social fund, which is setting a somewhat different context for us. For example, last time, the Department received 30% of funding in advance. This time, we are getting 1% in advance. Organisations can no longer access prepayment in terms of 30% of project costs, however we are planning to see whether we can do 5% prepayment, which does actually mark a very significant risk for us, but it is one that we believe is important to take.

Also, given the rigour of the situation and our past situation in terms of scrutiny from the European Commission, we are now looking for 10% of net cash assets relative to the scale of application from groups that are applying. In the past, there have been a number of issues with scrutiny of the European social fund. It is worth noting that we have had two interruptions in the past number of years, and audit issues are being raised. Audit is not just an issue for the Department, it is also an issue for the European Commission. There have been examples of difficulties in terms of determining what is eligible expenditure, record keeping for audit inspection and compliance with procurement procedures. That is why the financial capability assessment is now such a key focus at an earlier stage in the process.

Perhaps the key issue where I think that concerns have been raised and where, in my judgement, a remedy was required from the Department was in relation to the submission of management accounts. I want to be clear on a number of issues. First, the guidance notes were very clear about the requirement for both audited accounts and the management accounts. The management accounts are intrinsic towards the financial capability assessments that are taking place. We did make clear in the notes that we would seek further information or, indeed, clarification, from groups that submitted management accounts, and 27 such organisations were contacted for that. Concern has been expressed that there were 43 organisations that did not submit management accounts as part of that process, for reasons that are not entirely clear to us. The flip side of the coin, of course, is that well over 90 did submit management accounts. Nonetheless, that scale of failure at phase 1 did strike me and, indeed, many others as being somewhat strange.

I am conscious that people have asked me to do some sort of internal review or to take charge of the process. There has been a number of internal discussions in the Department over the past number of weeks around this issue. I have seen different letters and correspondence coming through, just as many MLAs have. To me, when looked into this, the central issue and what it ultimately boils downs to is different interpretations of what is understood as management accounts and also how the Department treated the submission of management accounts. I want to make the distinction clear in this regard: at times you can maybe define seeking further information or clarification perhaps in two different ways. One interpretation is that, where someone attempts to submit management accounts but fails to submit all the aspects that would be commonly understood as constituting management accounts, there is a case for seeking that information. Alternatively, you could have a stricter interpretation of that in the sense that someone had to submit all the different elements but there may have been a need to clarify the figures in relation to the management accounts. By and large, the 27 organisations that were contacted were being asked for what were missing elements of management accounts, whether an income expenditure or a balance sheet — most frequently a balance sheet.

Ultimately, in my judgement, we did not have a sufficiently clear delineation in a situation, on one hand, in which groups submitted an attempt at management accounts for which we had to seek clarification and, on the other, those that did not submit any management accounts at all. To ensure that we have a level playing field in the process going forward, the decision was taken at a senior level in the Department, with input from both myself and Derek as permanent secretary, that we would reopen the process to allow management accounts to be resubmitted across the board, including by the organisations that were failed initially in phase 1 for not submitting those. Those organisations have had until today to submit those accounts. I believe that, by 10.00 am today, 37 had resubmitted, plus how many others, John?

Mr John Noble (Department for Employment and Learning): Fourteen of the 17.

Dr Farry: That is 14 of the 17 that were ruled out in a financial capability assessment. There are another 51 sets of management accounts back in the system that we will have to scrutinise over the coming days.

I want to make a couple of points clear as we move forward in this regard. First, while we have taken the decision to reopen the process of management accounts, that does not in any way mean that we are going to be diluting the scrutiny process. We have the European standards that we must ensure we adhere to very closely. The same process of rigour in relation to financial capability will be an essential part of the process as we move forward from here. Secondly, we are in a situation where we are 1·8 times oversubscribed for the available funds from the European social fund. Not everyone is going to be funded, irrespective of how this process works through over the coming weeks.

The final thing that I want to make clear is that I am satisfied that the process that the departmental officials conducted to seek further information was done entirely in good faith. Where we have intervened and sought to put in place a different approach is where there is a sense that there is not an entirely clear-cut, robust and objective distinction between the situation where some groups were asked for clarification on their management accounts and others did not submit management accounts at all. It is for that reason that we have opened the process up again. I was satisfied that no one has acted in a spirit of trying to move in an underhand way to give certain groups a degree of favouritism or some inside knowledge or with any sense of prejudice or bias towards particular organisations to get them in or to get certain organisations out. We have a level playing field in all of this. You have my commitment that this process will be objective, rigorous and fair. When we come to a final set of results around which we will make funding decisions, that is something that we, as a Department, will be able to stand over. Decisions will be based on merit.

I will hand over to Derek, and we will then be happy to take questions from the Committee.

Mr Derek Baker (Department for Employment and Learning): Thank you, Minister and Chair. I will be very brief, as the Minister has covered most of the detail. It is really important to me, as the accounting officer in the Department, that we have a fair, transparent and robust process for the European Social Fund (ESF) programme applications. This is a really important programme. There is an awful lot of money at stake, and many of the potential applicants are doing very important work that contributes to our broader policy objectives. It is important that we get this right.

There are a couple of points that I want to highlight. As an accounting officer who will ultimately be held to account for a large proportion of this programme, I fully support the need for a financial capability assessment. That, in large measure, derives from the requirements imposed on us by the European Commission. We know that the European Commission auditors will audit this very stringently. That is often difficult for us and the organisations. However, if they find in projects deficiencies in financial governance, financial record-keeping or financial capability, they could interrupt the whole programme, as they have done twice with the current programme. That means that the money stops flowing for everybody — for every project, not just for the projects that they audit. Therefore, it is absolutely right that we have such an assessment. It is right that we ask for both audited accounts and management accounts as part of that process.

The second point that I would make is that, inevitably, many organisations are going to be disappointed, because I am quite sure that the total value of applications will exceed the pool of money available. That reinforces the need for us to have a robust process. I am alarmed by some statements or comments that I have heard kicking around that somehow the Department is trying to exclude the voluntary and community sector to hold money back for itself. I want to put on the record now, categorically and unambiguously, that that is not the case. There are no DEL programmes for which we are trying to hold money back that have not been made explicitly clear in the approved ESF programme. We will want to push out to all the applicants the full amount of funding available under the various priorities that have been identified; for example, helping the unemployed into work, NEETs categories, disabled categories and the community family support programme. It is really important to understand that. We will not be holding back any European social funding for DEL programmes. That is not to say that public sector organisations, such as health trusts, local councils and further education colleges, cannot apply alongside all kinds of other bodies. They will apply, and they have applied. However, we are not holding any of that money back for DEL programmes.

I will make two final points. I am right with the Minister in being absolutely confident about the bona fides and integrity of the departmental officials dealing with this process. I am absolutely confident that nobody has behaved unethically in any way or shown any undue favouritism to any organisation outwith the scope of the guidance. Secondly, such is the importance of this issue to us, both the Minister and I personally got involved. The Minister made reference to the fact that we have had internal discussions at the most senior levels of the Department. That is why we have taken the decision that we have in the last week to make sure that there is a level playing field on the issue of management accounts and so that everybody has an equal opportunity to participate in the programme.

Those are all the comments that I would like to make at this stage.

The Chairperson (Mr Swann): Thanks, Derek and Minister. I appreciate you coming here and supporting your officials, because I think that you should play that role. If you reflect on the evidence and the presentation that was put to us, as a Committee, last Wednesday in regard to the direct questions that we asked, I am sure that you can understand the concerns that we raised about a process that is neither transparent nor on a level playing field. One of the things that you have said is that you have both got involved. I firmly believe that the two of you would not be involved, given the level that you are at, unless you were reflecting some of those concerns as well.

Minister, you and Derek have presented the good workings of the programme, the need for financial accounts and management accounts on financial capability in line with the European requirements. That is not the concern that we are raising with you. The concern that we are raising with you is how the whole process has been handled from the documentation and the involvement of senior departmental officials, with some assessment panels excluding them and their not being present at other assessment panels. There is a perceived interference, if that is not too strong a word, from some officials in certain applications. That is what is being reflected to us from organisations that have applied. If you have confidence in your process, why have the two of you now thought it necessary to become involved?

Dr Farry: First of all, I am here today at your invitation, and I want to put that into context. We are here to respond to concerns that were expressed to us. Like all of you, we are aware of the volume of correspondence that has gone round on the process over the past number of weeks. The vast bulk of that correspondence has related to the issue of management accounts in or out. We seem to have moved on somewhat from the issue of the composition of the various assessment panels, and perhaps we will come to that in a moment. From my perspective, I want to ensure that the process is fair and that we are giving everyone a level playing field. That said, I want to make a distinction between ensuring that there is fairness and ensuring that there is transparency. For me, the issue boils down to the fact that we did not have, ultimately, a totally 100% objective standard in relation to management accounts, and that is why a decision was taken on that very particular point around the issue of allowing those groups that have been excluded from phase 1 for non-submission of management accounts to have a second attempt.

In terms of the wider point that the process, in some way, is not transparent and is in some way unfair, I am not entirely sure what you are getting at. To my mind, the process has been entirely open. We have gone above and beyond the practice previously; for example, having the roadshows to enable people to have a full briefing on what was expected. The guidance notes set out the process in great detail, so I am not entirely clear what exactly is not transparent or fair beyond the very particular point that has been raised by a number of organisations over the past number of weeks on the issue of management accounts and their interpretation.

The Chairperson (Mr Swann): Colin is here, and we raised the concern with him on Wednesday about how he felt, as the manager of the ESF accounting body, that it was OK for him to sit on some assessment panels for, I think, "advice and guidance" were your words, Colin, although we do not have Hansard — John, sorry. He sat in on some panels for advice and guidance but not others. There is confusion in the Committee and in the organisations out there as well as to how someone at John's level sat in on some assessment panels to give advice and guidance but did not see it as a contradiction that he was not sitting on them all to provide that level playing field.

Dr Farry: The implication that you are making, Chair, is that, in some ways, that decision-making is not consistent across the panels.

The Chairperson (Mr Swann): It is not an implication, Minister, and I think —

Dr Farry: If you are actually going beyond implication and making the charge, we have to reject that. To be frank, you have no basis to make that claim that the process has been anything other than objective throughout.

The Chairperson (Mr Swann): So you think that one individual's participation on certain assessment panels but not them all, at John's level, is completely equitable and transparent.

Dr Farry: People will attend different meetings, and you used the phrase that they are there for advice and guidance; they are not part of the decision-making process. If you are interpreting the use of the phrase "advice and guidance" that somehow an official is giving a nudge in a particular direction that a certain organisation should be treated more favourably than others, you have no basis for making that claim.

The Chairperson (Mr Swann): John is here. What enticed him to sit on certain panels and not them all?

Dr Farry: I am not sure whether you want to retread what was discussed on Wednesday, but officials responded to those questions at the last session.

The Chairperson (Mr Swann): But we did not get answers for a lot of those questions, Minister, and that was —

Dr Farry: With respect, Chair, I took the opportunity of listening to the full tape of the Committee. Our officials were with you for the best part of two hours, and they gave multiple answers to the same questions from different angles.

The Chairperson (Mr Swann): Exactly. That was our point: they gave multiple answers; not the same answer.

Dr Farry: I think that they were consistent. I am happy to pass over to Colin and John at this stage to let them elaborate further on that point.

Mr Noble: I want to clarify the fact that I sat in on a number of the assessment panels in that advice and guidance position. As for the ones that I did not sit in on, another member from the managing authority sat in on them, so there was always somebody from the managing authority at each of the assessment panel meetings for advice and guidance. I did not sit in on all of them.

Dr Farry: And that would have been on process.

Mr Noble: Yes.

Mr Baker: I assume, Chair, that you are talking about the assessment panels for phase 2.

The Chairperson (Mr Swann): Financial capability as well. That is where I would like to go at this stage. Maybe you could talk about the process for the assessment panels and financial capability. Organisations that have now submitted management accounts are raising issues about the openness and transparency of financial capability. That was undertaken — you can correct me on this — by a qualified accountant in the Department.

Mr Baker: That is correct.

The Chairperson (Mr Swann): One qualified accountant who made recommendations to John or one of his two deputies.

Mr Baker: The same qualified accountant did all the assessments.

The Chairperson (Mr Swann): Will that be the same for the ongoing process?

Mr Baker: Yes.

The Chairperson (Mr Swann): For the organisations that have now submitted management accounts, what bias will there be?

Dr Farry: Zero.

Mr Baker: Bias? Explain, Chair.

The Chairperson (Mr Swann): You know rightly —

Mr Baker: No, no.

The Chairperson (Mr Swann): Will there be a bias?

Dr Farry: Of course there will not be any bias.

The Chairperson (Mr Swann): There will not be any bias.

Mr Baker: A bias with regard to what?

The Chairperson (Mr Swann): The fact that it will be known that they were late in supporting their management accounts.

Dr Farry: None.

Mr Baker: Absolutely none, Chair. That is a —

The Chairperson (Mr Swann): Sorry, John, you seem to find this funny.

Mr Colin Jack (Department for Employment and Learning): I do not find it funny.

The Chairperson (Mr Swann): Colin; sorry. Apologies.

Mr Jack: Not at all.

Mr Baker: I find it far from funny that a charge might be levelled or a suggestion might be made that we would show bias against our organisations that have now submitted management accounts. Why would we do that?

The Chairperson (Mr Swann): That is the clarification that a lot of organisations out there seek.

Mr Baker: I am genuinely perplexed that any such suggestion would be made. We took a decision last week — the Minister and I and other senior officials — to change the process to allow management accounts to be submitted to create a level playing field. Why would we corrupt that process deliberately by showing some bias? Why would we show that kind of vindictiveness? I am genuinely amazed and perplexed that any such suggestion could exist out there. That is totally anathema to us.

The Chairperson (Mr Swann): I am glad to hear that, Derek, because we are here because of the perception out there.

Mr Baker: OK. Well, if there is a perception, Chair, I say categorically that no bias will be shown. That commitment is right across all the officials in the Department who are dealing with this. I, as the accounting officer, will personally see to it that no bias is shown. That is really important to me. That kind of suggestion is outrageous.

The Chairperson (Mr Swann): I am glad to hear that, because that is the perception that has been presented to us.

Dr Farry: I am not aware of any statement or even implicit sense that has ever been given by any official that would even allow such charges to be made against the Department. We are erecting a straw man here in the sense of asking us to give a guarantee that we are not going to be corrupt. There is no basis on which to even formulate such questions.

The Chairperson (Mr Swann): Minister, I am sorry; going back to the perception that we have —

Dr Farry: Where is that perception coming from?

The Chairperson (Mr Swann): That perception is coming out of how the first stage of this process has been handled in regard to management accounts, the submission and resubmission of them. Some organisations were contacted to provide additional information, but not every organisation received the same contact. If you listen to the recording of the last meeting, that was all rehearsed. That is where the perception comes from. That is why we have asked you here today, Minister. I am glad that Derek is here as the accounting officer to give us the reassurance that there will not be bias against the organisations that submit their management accounts in regard to financial capability.

Dr Farry: That question is as relevant as asking me to give an assurance that I am not going to go out of this room and commit a crime in the next half hour or hour.

The Chairperson (Mr Swann): Look, Stephen —

Dr Farry: It is on the same level.

The Chairperson (Mr Swann): No. Please, let us not go down that road. Try not to be flippant. We are taking this seriously.

Mr Baker: So that we get the best possible European social fund programme — I know that there are lots of organisations out there that deliver superb services in the context of this programme — it is important for us to have the widest potential pool of applicants to assess. It is a bit like a job interview; you want the widest possible pool of applicants.

It was partly for that reason that the Minister and I took the decision to do what we did last week. We want to let more people through the door to be assessed at phase 2. We are not going to corrupt that by showing bias; we are just not going to do that, Chairperson.

Dr Farry: Let me also address the issue of contact with the organisations, as we have looked into it in great detail. That contact was purely on the basis of seeking further information from organisations that had submitted partial management accounts. There was not, as has been suggested, a call to certain organisations to say to them, "You have forgotten to submit management accounts, get them in quick and we will turn a blind eye to it". The process was done in good faith. The reason that we have intervened to say that, to reopen the process, is that we did not believe that there was an objective standard that separated that group of organisations from those that did not submit any management accounts. That way, we had to ensure that we had a level playing field. The process of contact with the organisations itself was all above board and done in line with what was stated in the guidance notes.

Ms McGahan: Thank you for being here. I want to focus on two issues in my constituency concerning the First Steps women's centre

west of the Bann having the highest rates of economic inactivity. It was turned down on its financial capability assessment. My understanding is that no one had contacted the First Steps women's centre to seek clarification of its accounts. It has been brought to my attention over the last day or two that the Department might not have recognised the centre's accounts as being reserves and that it was not funding for a project under a community foundation. Can you provide any detail on that? The First Steps women's centre will close if we do not get a solution.

Dr Farry: First, I am reluctant to discuss individual applications. We are trying to ensure that we have as level a playing field as we possibly can in this process. It is for that reason that I have been personally reluctant to engage with potential bidding organisations over the past number of months, including having meetings about management accounts. We have to treat everyone on a level playing field.

It is probably best that we address the issue in general terms. There were organisations in phase 1 that were turned down for not having management accounts; others were turned down because they did not pass the financial capability assessment. Organisations in the latter category still have two opportunities at this stage. First, resubmit their management accounts, which would in itself trigger a second financial capability assessment. Beyond that, in the event that they feel that the financial capability assessment did not fully take into account all the relevant information, an organisation has the option of an appeal. The appeals process is now put on hold pending the full scrutiny of the fresh management accounts that have been received today. That would be the pathway available to that organisation in the context that you have set out, unless my colleagues have anything further to add.

Ms McGahan: Minister, no one contacted the First Steps women's centre to seek clarification on its accounts. I know that some organisations have been spoken to, as you said, as a gesture of goodwill, but no one spoke to the centre and it has been turned down.

Dr Farry: I believe that there was rigour in the nature of the organisations that were contacted and those that were not.

Ms McGahan: I want to focus on the First Steps women's centre. My understanding is that no one contacted it to seek clarification.

Dr Farry: The point that I am trying to make, Bronwyn, is that in some contexts groups were contacted in the event that there was not sufficient information in relation to their management accounts. There may well have been organisations from which there was sufficient information for a financial capability assessment to be conducted. In the latter context, they would not have been contacted by our officials necessarily. There are two slightly different contexts being mentioned here, but they have been written to, like all the other organisations, and given the opportunity to resubmit. The fact that they were not contacted is not necessarily something to be surprised about because the contact that was made was in relation to a very particular point, which was incomplete management accounts. That may not have applied in the case that you have set out.

Mr Jack: The majority of organisations that submitted management accounts would not have been contacted as part of the financial capability assessment. We know that 27 organisations were contacted because we needed more information from them.

Ms McGahan: The organisation was turned down, and it is going to close.

Mr Jack: It has received a letter, and it now has an opportunity to appeal and to have a meeting to clarify the outcome of the financial capability assessment.

Ms McGahan: It may be too late. That is what I am being told by the First Steps women's centre. It will have to dip into its reserves to start making redundancies.

Dr Farry: At this stage, every organisation is in the same position. Until we complete the process for the current round we cannot make any funding decisions. We will be working at full pace over the coming weeks to make the decisions by 1 April to allow those organisations that will have funding not to have any gaps. Insofar as an organisation may have been turned down at this stage, there is an appeals process and those appeals are factored into our timetable. If an appeal is successful, the organisation is back in the mix and its application may well be scored alongside the others and the decision is made on that basis.

We are oversubscribed by 1·8 times the value of the European social fund, which, in itself, is 20% higher than last time round. Not every organisation will be funded as part of this process, and that is the harsh reality.

Ms McGahan: OK. The second issue is to do with the full equality impact assessment (EQIA), which was not carried out. I know that an initial screening exercise was conducted on the high-level operating programme and, as a result, it determined that a full equality impact assessment of the programme was not necessary. Without a shadow of a doubt, the way that the criteria have been framed has had an adverse impact on women's groups in particular. Surely, in light of that, a full EQIA needs to be carried out.

Dr Farry: What outcome do you think an EQIA will deliver, Bronwyn, that is different from the course that we are currently on?

Ms McGahan: Currently, no full EQIA has been carried out, but we can already see that there is an adverse impact on women's groups in particular. If a full EQIA was carried out, it might result in the Department having to change its criteria.

Dr Farry: We have an operational plan that has been agreed with the Commission setting out the parameters around which bids will be made. Under it, final decision-making will be sensitive to issues of geography, duplication and coverage of sectors. I am sensitive to ensuring that the women's sector is represented through employability schemes. I appreciate that, particularly for women returners, the community setting may be much more appropriate than other types of provision. While some bids will cover both genders, we need to make sure that we have proper coverage of the women's sector. That does not necessarily mean that organisation X will be funded in all circumstances. Looking ahead, it is one of the things that I am mindful of in ensuring that we have proper coverage on.

Frankly, this is not here simply as a means by which we hand out money to organisations without any overarching policy framework. As a Department, we want to ensure that our objectives in skills and employability are properly addressed. That is why we need to ensure that we capture all the constituent parts of that agenda, including disability, older workers, young people who are not in education, employment and training, and women. We are acutely aware of those issues.

Ms McGahan: If a full EQIA is not carried out, how will you ensure that the women's sector will not be adversely impacted by the criteria set by the Department?

Dr Farry: In that sense, an EQIA may not actually change any sense of the outcome.

Ms McGahan: But you have not carried out an EQIA, so how do you know?

Dr Farry: An EQIA may not be that advantageous in predetermining an outcome. I will hand over to Colin to talk about the stage-2 outcomes and how we will look at coverage.

Mr Jack: For the stage-2 outcomes, we will look at all the organisations that have come through under all the strands against a range of criteria. There is a general strand for people and groups facing barriers to employability, and we have a list of those barriers. We will seek to ensure that all the subcategories of people facing barriers to employability are covered. In that process, we will also look at geographical coverage and whether we have all those groups covered. We will look at the new council areas, but I do not think that we can expect to get every group in every council area.

The Chairperson (Mr Swann): I am conscious of the Minister's time, and of our time too. Can you forward that?

Mr Jack: We will certainly look at it on a broad geographical east/west, north/south basis.

Ms McGahan: Colin, are you confident that if someone who is directly affected by this decision makes a complaint to the Equality Commission, and the Equality Commission carries out an investigation, it will favour the Department?

Mr Jack: The Equality Commission is an independent organisation. Its remit is —

Ms McGahan: But you have not carried out a section-75 evaluation. That is what I am concerned about.

Mr Jack: We carried out a screening exercise under section 75, which identified that there was not a need to conduct a full equality impact assessment. We are looking at the outcome of the process to make sure that there is reasonable coverage of all groups. If reasonable coverage does not come out of the process as it stands, we will consider what measures we would need to take to mitigate that.

Mr Ramsey: Minister, you are very welcome. I note your language; I hope that it is done in good faith to bring confidence and integrity to the process. For the past number of weeks, those in and outside the room have had a sense of anger, frustration and distress, because they genuinely believe that there was a cull taking place to exclude groups and to minimise the impact on the number of applications. I share the Chair's sentiments on that. I did not want to go back, but it is important to go back. We had a process in train of two groups processing applications. Is that fair, Colin? We had two different teams processing applications.

Mr Jack: I am not sure that I recognise that process.

Mr Ramsey: OK. In the lead-up to, and the examining of, the processing of applications, was there one team or two?

Mr Jack: Staff in the ESF managing authority in the Department looked at all the applications and all the requirements set out in the application form.

Mr Ramsey: Was it one team?

Mr Jack: There were a number of individuals who were part of a team led by John.

Mr Ramsey: John has conceded that he was part of, and observed some of, the processes of the applications, and another senior member of the team looked at and observed other processes.

Mr Jack: John distributed the work involved in assessing the applications among his staff. He did some of it himself; he delegated some of it; and we had the financial capability assessment undertaken by a qualified accountant who is part of John's team. That is the way that any process is administered.

Dr Farry: We are not talking about splitting the management authority into two halves or two teams operating separately. John would have managed the overall staff. Not every person would have been involved in every meeting or every consideration, but all of them acted as part of one team operating to the same process.

Mr Ramsey: Minister, my point is that people outside this room — people who are intimately involved in the process — believe that the guidance had changed; they also believe that there was no communication with some of the teams. Do you, as someone who has overall responsibility for the Department, believe that it is right and fitting for a team leader who is overseeing a process as sensitive as this to be ringing people and sending e-mails to them and not be part of others? In fact, he was not even in the room when those applications were being processed.

Dr Farry: There is a lot there, Pat. We have to reject the notion that, somehow, there is an agenda of trying to cull particular programmes and operations. In some respects, we are doing this again, a second and third time. I can categorically say that that is not happening; there is a level playing field. I might be in a slightly more privileged position, having had sight of the organisations that have been rejected so far, pending the resubmission of management accounts. Sometimes, the outcomes are frustrating to me in that, when I see them, I say, "Oh. They didn't get through; that's a bit disappointing." In that sense, there is no agenda to try to restrict anyone.

We want the maximum number of bids to give us the best possible choice so that, based on the merit ranking, we can award the best programmes with delivery of the policy outcomes. I can only reiterate categorically that there is zero agenda in the Department to rule anyone out, either because they do not fit with particular objectives or out of some sense of revenge or retaliation for what has happened. This will be a totally fair process without any bias or prejudice.

My confidence in John is absolute; he has acted with integrity throughout. We have explained on numerous occasions the context in which contact was made, and that was done without bias or favouritism towards any organisation. Many members have asked me to have meetings with particular organisations over the past number of days. Frankly, dragging me into such conversations would do far more to prejudice and undermine the process and to create an absence of a level playing field than John responding to queries that come into the Department and clarifying issues. The one thing that we can be certain of is that, if organisations feel that the process is not fair, they could say, "I see the Minister had a meeting with organisation x and I see that it happened to get approved on the final list, but organisation y did not get through". That would open us up to charges of bias and prejudice.

Mr Ramsey: Genuinely and on the record, any member making comments here is reflecting the opinions submitted to us by all the groups, including those that got through phase 1 and are anxious about the process. People need to be convinced that the process was not selective and that no favouritism was shown towards applications. I will share with you an e-mail that I received from a group. The e-mail is from a DEL official who is working on the process. It said:

One of your officials said that, and other members are shaking their head because that is the impression out there.

Dr Farry: There are two things, Pat. First, you asked me to have a meeting with groups that were affected by the management accounts issue. However, if I had followed through with that meeting, I would have prejudiced the process. Secondly, we have accepted that we did not make a sufficiently objective distinction between the groups that were contacted and those that were ruled out for non-production of management accounts, and, for that reason, we took the decision to reopen the process to allow everyone to resubmit management accounts. There is a world of difference between our doing that in recognition that we believed that, inadvertently, we did not have a level playing field and our accepting that the process was flawed, biased or corrupted in some sense.

Mr Ramsey: Minister, that is the impression . I know that I have had my time, but I support the Chair's opinion that we need the absolute assurance that there will be fairness, integrity and confidence that all the organisations that have contributed to employment in the past, whether for disabled people, older people or women's groups, will have a place in the European social fund.

Mr Baker: Chair, may I make a brief comment? Mr Ramsey has asked for an assurance. I know that I got a bit passionate earlier, but, as head of the Department, I repeat those assurances absolutely. Mr Ramsey said two things, and the Minister came back on one of them. You suggested that there was an impression of a cull on applications.

Mr Ramsey: Yes, there is.

Mr Baker: I do not know why there would be a cull. Is it so that the Department could hold money back for itself or pass less European social fund money out than is available? I do not understand that point. I said before that the total amount of European social fund money available under the priorities will be passed out.

Mr Ramsey: Derek, people believe that the guidance notes on the criteria for the financial and management accounts were changed to suit a departmental plan to cull.

Mr Baker: When were the guidance notes changed?

Mr Ramsey: It is alleged that it was between the initial consultation meetings taking place and the guidance notes being sent out.

Mr Baker: Sorry, the guidance notes were changed?

Mr Ramsey: That is what is being alleged, yes. It is alleged that the guidance notes were changed for the criteria that enabled the Department, in essence, to bring forward —

Mr Baker: In what way were the guidance notes changed?

Mr Ramsey: They were not as informative. You have conceded today that there was not enough clarity in the guidance notes, and that is why you have opened up the process again.

Mr Baker: I have one issue, Chair, on the management accounts. I would love someone to explain to me in what way the guidance notes were changed. First, they were not changed, except as concerned disability. In what way were they changed so that —

The Chairperson (Mr Swann): Derek, I am conscious of time. To clarify for you, the change was maybe in the roadshows and how what was required was described. It was not so much the detail of the guidance notes as the presentations from the officials undertaking the roadshows: what they were communicating to groups changed. That is why there was a suggestion of an unfair playing field for organisations. Some organisations are getting clarity, whereas those at the beginning of the process did not.

Ms Sugden: Thank you, Minister, permanent secretary and officials. I do not accept that you should be satisfied with your process, particularly when you changed it because you realised that there was not a level playing field. That is the crux of this debacle. According to the policy that your Department wrote in connection with the guidance notes, only those who submitted some form of management accounts could be contacted. How is that fair? I repeat my earlier point: are you suggesting that, if one of those groups had put a figure on a post-it note, your Department would be prompted to contact them to get more information? I have difficulty with that policy.

Dr Farry: First, we have not said that we are fully satisfied with the system and the process to date; what we have said is that we are satisfied with the transparency of the process. The roadshows were, perhaps, not executed as smoothly as we might have liked; nonetheless, they were an addition to what the process was previously. Moreover, the guidance notes were very clear about the process to be taken forward. I am also satisfied that we have not displayed any bias or favouritism towards particular organisations as part of a cull or other agenda.

However, we have accepted that the process was not perfect on the very particular point to do with management accounts, and we have explained our concerns in that regard. It is probably a little bit simplistic to say that anyone producing a post-it note with a few figures on it would have triggered a request for clarification from officials. Largely, clarification would have been requested where an organisation perhaps produced income and expenditure figures, but not the balance sheet or vice versa. In the vast majority of cases, that was the nature of the clarification that we sought. Some groups misunderstood what actually constituted management accounts.

Ms Sugden: With respect, I was being flippant when I made that remark, but your own guidance notes suggested that any form of financial accounts go through. Your officials told me last week that it would have prompted them to require more information. Surely, people who had not submitted should have prompted you just as much as someone who submitted very little. I am not even sure that such a policy is admissible. To be honest, I think that that is where the lack of confidence on the part of outside groups stems from.

Dr Farry: That is the precise point that we have accepted.

Ms Sugden: Not only have you undermined people's confidence in you in this process generally, but you have undermined the people who have got through phase 2, because they now feel that they are being put in a bigger pool of candidates, thereby reducing the probability of their getting this funding.

Dr Farry: With respect, you cannot have it both ways.

Ms Sugden: To be honest, I would not have had it either way; I would have had the process done right from the beginning.

Dr Farry: So would we, but what do you want us to do once we have accepted that, inadvertently, there is ambiguity about the receipt of management accounts? We have a choice. One option for us as a Department was to say that everything that we did in the process was fine and objective and that we stand over it, that it was clearly stated in the guidance notes that organisations had to submit management accounts, and for those organisations that did not, tough. We took an objective decision to seek the full figures from those who submitted partial management accounts. We could have stood over that decision. Ultimately, I took a decision that there was sufficient grey area to allow for a lack of confidence in the process, and that is why we decided to reopen it to everyone to resubmit.

I have to make it very clear that the problem was with a very narrow aspect of the process. That has now been rectified. While some are already through, the addition of more people to the pool does not harm the public interest, because every organisation should be graded on merit, and we want the very best programmes for Northern Ireland as a whole. The rest of the process, however, remains as transparent and as full of integrity as it was at the outset.

Ms Sugden: I do not think that the guidance notes were clear, and that is why we have ended up where we are. That mistake has undermined the process. I am not criticising you for a lack of transparency; I am criticising you for this being allowed to happen. If only up to 10 applicants had not submitted their financial accounts, I would accept that; but this is a significant number, which is why you did what you did. You recognised that there was not a level playing field, which is why you changed what you did. In the context of where we are today, do you not feel that has undermined the whole process?

Dr Farry: No.

Ms Sugden: Has it not undermined the process both for the people who have now resubmitted and the people who got to phase 2?

Dr Farry: We have acted to ensure that we have as level a playing field as possible. We would have been well within our rights to proceed. You say that we would have turned a blind eye and taken a different decision had there been 10 as opposed to 43, but there is no objective reason for making any distinction between 10 and 43.

Ms Sugden: There is the context.

Dr Farry: The issue is whether there was ambiguity or not. The numbers are irrelevant in that respect. We took the decision that, on balance, there was a degree of ambiguity in the process, and we have sought to address that. We could have proceeded regardless, particularly given that we are oversubscribed, but we believed that the fairer thing to do was to reopen the process.

Ms Lo: Thank you for coming, Minister, and thanks also to the two officials for coming back. You reiterated again and again that the Department wants to be fair and have a level playing field, but do you not think that the requirement for organisations to have 10% of cash reserve up front may disadvantage smaller organisations in the community and voluntary sector? Bigger applicants, like the councils or the FE colleges, would easily have that 10%. That is why there is the perception in the voluntary sector that you will squeeze out small organisations.

Dr Farry: I appreciate why at first glance you might draw that conclusion. You would be surprised, however, at the mix of groups that have had difficulties to date: it does not necessarily follow that big organisations are faring better. There is a genuine mix in how things have been taken forward. That said, I accept that the 10% requirement will create a challenge for organisations. As a Department, we have had to respond to the evolving context of the European Union. I do not know whether John or Colin wants to set out the changed context we are dealing with and why we reached that 10% decision.

Mr Noble: As we clarified at the last meeting, 10% was to take account of the fact that there is no 30% advance payment to projects: for example, under the previous programme, a project being funded at the rate of £100,000 per annum would have got a £30,000 advance. However, that is not available to us in the current programme. The advance now is only up to 1%. We then looked at including that 10% in the financial capability assessment to ensure that the project would at least have some cash to manage their project on a day-to-day basis. As I am sure you will appreciate, projects must have made the expenditure and declared it to us in a claim before we can pay out. If, for example, a project that was spending £10,000 a month did not have access to that amount of funding, it would not be able to fulfil the obligation of making a claim to us. That is why we looked at the figure of 10%. It is a very minimum amount, and it does —

The Chairperson (Mr Swann): I am conscious of time, John, and you covered that last time. The query, even last time, was whether 10% was a departmental figure.

Mr Baker: It is.

Dr Farry: Bear it in mind, Chair, that, as a Department, we now get a 1% advance from the European Commission, which is a challenge for us. We are prepared to give organisations a 5% advance, so we are taking some risk.

Ms Lo: Yes, but the nature of the voluntary sector and NGOs is that they do not have a large reserve. When they have a reserve, they plough it back into the organisation, so having that 10% will be a huge challenge for them.

Dr Farry: I will put it in context, Anna: at the precise time that you were having your evidence session with the officials last week, I was sitting in front of the employment and social affairs directorate in the European Commission, discussing the ESF amongst other things. I was left in no doubt about the rigour with which they are scrutinising the process. Even as we speak, we are looking at another potential interruption to the outgoing programme. We are confident that we will be able to avoid that through the provision of additional paperwork to the Commission over the coming weeks, but that is an ongoing threat. That is why it is important that we have that degree of rigour around the process. I appreciate that it causes huge challenges for organisations, but, if we are to have a European social fund, those are the rules that we have to operate within.

Ms Lo: I am on the board of an organisation — I will not mention its name — whose application failed despite its project having received awards in the EU for being a good example. It failed the financial capability assessment, so you are not really assessing people on quality or on their track record. You are simply saying that they do not have that upfront 10%, so they are out.

Dr Farry: Yes. Quality will be an issue for the phase 2 analysis. The financial capability at phase 1 is a barrier that we just cannot get around. It is intrinsic to the sustainability of the process for everyone.

Ms Lo: If they fail stage 1, they are out.

Dr Farry: The point we stress is that, if we were to end up with certain organisations not fulfilling their financial capability obligations, they could bring the whole thing crashing down for everyone.

Mr F McCann: Thanks very much for the presentation today. It is probably getting a bit hot and heavy at times, but that is normal in the thrust of political debate.

I want to go back to what Pat Ramsey and the Chair said about people's perceptions. Not everything operates on people's perceptions. You asked how people could believe that there might be some bias, but the process seems to be slanted towards the bigger organisations. You are shaking your head, Minister, but will you please let me finish? It seems to be slanted towards the bigger organisations, whether statutory organisations, other Departments or trusts. They have the financial wherewithal to have the 10% cash reserve. They are also able to have people looking full-time at applications, and they are more inclined to apply for the larger amounts of money that may be available. Bronwyn referred earlier to the fact that the only women's organisation west of the Bann lost out. Surely, when you ask why it lost out, it was because there seems to be a slant towards the larger organisations.

Dr Farry: I can only reiterate what I have said, and it follows on from the question that Anna raised. You would be surprised by the nature of the organisations that are moving through the process and those that are not. There is not the pattern that you suggest. There have been some quite surprising developments so far. Yes, we have more stringent tests of financial capability, but we are determined to ensure that we have a level playing field and proper coverage, both geographically and across the subsections of the different strands. We want to ensure that a variety of projects is resourced.

It is not in our interests to pile in 20, 30 or 40 projects all working in greater Belfast and in the same area — for example, working with young people — at the expense of other areas such as women, disability or older workers. That is not an efficient use of the resource available to us. While I cannot guarantee an outcome for any particular organisation or geographical sub-area, if we end up piling on more duplication in what we deliver, we will not meet the objectives that we want to be delivered through the European social fund.

We want to use this as strategically as we can.

Mr F McCann: That is the point. You said that there would not be an equality impact assessment, yet one sector stands out as having been unduly impacted. Surely that would trigger something. Last Wednesday, I asked how people could sit down and assess the applications and not know that a particular problem was arising and that the process leant towards a particular sector. Probably, all this could have been avoided if somebody had said: "We have identified a problem. Let's us lift the phone and see where we are". Most of these organisations do not have a 10% cash reserve, and they may not have the financial wherewithal to be able to deal with some of the changes in priority and some of the questions on the form.

Dr Farry: Fra, had we lifted the phone in the context that you suggest, John would be guilty of the very things that you falsely allege that he has been doing over the past number of weeks. We wanted to be very careful to ensure that we treated people according to objective standards. That said, I am acutely aware of the situation in the local sector. I do not want to say any more about it at this stage, but I fully understand the point, and I am conscious of, ultimately, having gaps in provision.

Mr Buchanan: No doubt, with all the concerns raised, Minister, you have seen the lack of confidence around the table and among the organisations in the way that this process was carried out. Do you not think that it is now time for an internal root-and-branch review of the whole process and how phase 1 was assessed?

Dr Farry: At this stage, we need to be mindful of overreacting to the situation.

Mr Buchanan: It is not an overreaction.

Dr Farry: OK. I appreciate people's views on the process to date. I will use the term "a disproportionate reaction". If we were to go down the route that you suggest, a full root-and-branch review, the implication of what you are saying, Tom, is that we should pause the process pending the outcome of that, or do you want that review to happen after the process concludes? If it is the former, which I assume is the case, we would not be in a position to make decisions by the end of March, with a view to 1 April. That is the very thing that would imperil the continuity of organisations that have the potential to be funded by the European social fund, and jobs would be lost simply because of that lack of continuity.

We now have a real challenge to get this programme over the line by the end of March. Officials will work tirelessly over the coming weeks to ensure that that is the case. After that is done, obviously, we will do a lessons-learned exercise, which should be central to any major process that we do. As with anything, we can reflect on things that may well have been done differently. Certainly, you have my assurance that that will be done.

At this stage, I want to make it clear that Derek and I have interrogated the process deeply. Rest assured, Chair, that virtually all the questions asked of our officials in public have been asked behind closed doors, and not just on this but on other issues as well. We are robust in challenging what comes through. I am satisfied that any issue with the process is narrowly confined to a particular point to do with management accounts. I am also satisfied that, at all stages, as far as the outcomes are concerned, officials acted in good faith without any bias or prejudice. In some senses, we have done that internal review already, which has led to a decision being taken to reopen the management accounts issue. As for the process beyond that, no firm allegation has been laid against the process that should give us cause for concern at this point. Nonetheless, given the scale of the programme, we will do a lessons-learned exercise across the whole range of the process.

Mr Buchanan: Some organisations running programmes appear to be in deficit because the Department owes them money. They have done the work and submitted their invoice but have not been paid. What is the process for making payments to organisations that carry out functions for the Department and submit an invoice? Some groups told me that they had not been paid for 12 months. Does the Department not have a consistent policy on how to make payments to those groups?

Mr Noble: A recent internal audit report on the managing authority indicated weaknesses in our quality assurance process, which meant that we had to change our process for reviewing claims. As a result, there have been some delays in paying out on financial claims by projects. However, we endeavour to get payments to projects as soon as possible. If a project that has a problem with a claim flags that to us, we try to get the payment made. It is simply down to that quality assurance issue. We had to address that, which means going back to certain projects to clarify documentation. As the Minister may have mentioned earlier, procurement, for example, is a big thing with the Commission at the moment, so we have to be fully compliant before I make a payment on a claim. If I make the payment and there is ineligible expenditure, that could lead to problems down the road, like interruptions to the programme.

Mr Jack: We are required to have 100% evidence from projects of vouched expenditure in order to release a payment. That process was set out at the start of the current programme. That is what the Commission audits us against, and we have to —

Mr Buchanan: All I will say is that "some delays" is an understatement.

Mr Flanagan: You do not have a great record in two-stage tendering and two-stage application processes, if you remember the mess you made of the Steps 2 Success programme. You are telling me that you are not trying to hold on to the funding for your Department. Can you please explain why community and voluntary organisations are allowed to apply only for level 1 qualifications? That is equivalent to a D to G at GCSE, which many education institutions regard as a fail. Why is that the case? If it is not that the Department is trying to hold on to the maximum amount of ESF funding possible, what is the logic?

Dr Farry: First, I want to challenge what you said: I am not sure what you mean by the Steps 2 Success procurement being flawed.

Mr Flanagan: I remember a number of people —

The Chairperson (Mr Swann): Can we focus on ESF?

Mr Flanagan: I remember a series of hearings like this about it, too.

Dr Farry: Just for the record, Chair, the allegation has been made, and I need to set the record straight.

At the outset, Phil, we were clear about the rationale. We are trying to be more strategic in the use of the European social fund where we believe that the community and voluntary sector has a comparative advantage in level 1 interventions over the Department. There is the potential for a cleaner division of labour, whereby the community and voluntary sector will take on a greater proportion of level 1 interventions.

At the same time, we envisage, particularly in the further education sector, a retreat to some extent from level 1. Rather than having duplication in the system, with the community and voluntary sector plus the FE sector working with the same people, we allow the greatest intervention to be made by those we believe to be best placed. That is where we envisage the European social fund making the difference.

Mr Flanagan: What percentage of ESF funding do you think will be utilised internally by DEL, and how does that compare with the last ESF programme?

Dr Farry: The figure being utilised internally by DEL is that 40%, which we have been clear about all along, has been ring-fenced for apprenticeships and youth training. That applies across a range of skill levels. We have been transparent about that throughout, and that is entirely in keeping with the programme. It is also consistent with what we did in the last round of the European social fund. Beyond that, the figure for technical assistance is 2%. Is that right, John?

Mr Noble: Yes.

Dr Farry: The remainder of the fund is for the community and voluntary sector. We have not in any shape or form sought to land grab any of the remaining 58%. That is available for the community and voluntary sector, as was the case at the outset.

Mr Baker: The two gentlemen will correct me if I am wrong, but none of the European social fund money earmarked for priorities 1 or 2 will be kept by the Department. That will be pushed out to applicants under this process.

Mr Flanagan: Yes, but when I talk about the Department, I include the colleges, universities and agencies that are under your remit, as opposed to completely external organisations.

Mr Baker: Right, OK.

Mr Flanagan: Do you have figures for them?

Mr Baker: No, we have not earmarked any money for those organisations. This is a competitive bidding process.

Dr Farry: As NDPBs, they are entitled to make bids. We would never seek to direct that things like that should happen. They are entitled to make bids, and those bids will be judged on their merits.

Mr Flanagan: Do you accept that the way that the level 1, 2 and 3 breakdown occurred led to the perception out there that non-departmental public bodies will have a chance to access greater funding to help to offset potential cuts to them from your Department?

Dr Farry: No.

Mr Flanagan: You do not accept that that perception exists, let alone the reality.

Mr Baker: No, I do not accept that.

Mr Flanagan: So, once the scheme is up and running, will you be able to provide us with data in quantitative and percentage terms of the funding provided to community and voluntary organisations compared with the funding provided to bodies under the remit of your Department?

Dr Farry: Yes. It is also worth stressing that this is about additionality, not replacement.

The Chairperson (Mr Swann): Minister, an issue coming through, which organisations also asked about, is the process of appeal. How is that laid out, and how does it work?

Dr Farry: At this stage, appeals have been put on hold pending the current strand. John, will you set out the timetable?

Mr Noble: Yes. As you aware, organisations were to resubmit management accounts by today. We hope to go through that documentation and complete the financial capability assessments by the end of the week. We hope to have the assessment panels for those that successfully move to phase 2 at the beginning of March. The closing date for appeals in the new time frame is 9 March. During the week including 10 to 13 March, we plan to reconvene the appeals panel. We do not have an exact date yet.

Mr Flanagan: Has stage 2 started?

Mr Noble: Stage 2 had started for those applications that got through.

Mr Flanagan: So, what is the story now?

Mr Noble: Those are all on hold. Phase 2 has not been fully completed.

Mr Flanagan: OK.

Mr Baker: I want to make it clear that no organisation has found out whether it has been successful in receiving European social fund money.

Dr Farry: We cannot do that until we see the full picture of who is coming through from all the different processes.

The Chairperson (Mr Swann): Minister, what are your next steps?

Dr Farry: The next steps are that the process will continue. I would not normally be involved in the process at this stage.

Officials have a large amount of work to do over the coming weeks. They will present the list to me, probably towards the end of March, and we will have to make some very difficult decisions because we do not have the available resources to fund all the bids. There is a pass score and, to be clear and in the interests of transparency, it is not necessarily true that we will be able to resource every organisation that meets the pass mark, given that we are oversubscribed. That is the natural course of events.

As I said to Tom, we are happy to do a lessons-learned exercise on the process from top to bottom once it has been completed. At this stage, it is in the interests of the groups and the policy outcomes that we proceed on the basis that we have rectified what we believe was the misunderstanding in the process. We now have a level playing field, and it is in the interest of the groups to make decisions to allow those who have been successful to proceed as early as possible. In doing so, we will avoid a break in operation in some cases.

Ms McGahan: I want to make a comment. Minister, it is important that, when you carry out your deliberations, you look at the provision of childcare facilities. The community and voluntary sector has excellent provision in that area and, if we ignore that, we will fail to tackle economic inactivity. As you know, single parents featured very strongly in the report, especially those in rural areas.

Dr Farry: Economic inactivity may be touched on by ESF, but we also have a strategy that we hope will be agreed by the Executive in the coming weeks. As a result of that, there will be calls for potential bids from the community and voluntary sector on competitive piloting. Other funding opportunities, particularly for women returning to work, will have an interface with childcare issues.

Mr Jack: Typically, we make support for childcare costs available to participants in ESF projects, wherever they secure that childcare.

The Chairperson (Mr Swann): OK. Minister, Derek, Colin and John, thank you very much. I am sure that you are fully aware that we will come back to the issue at some stage.

Dr Farry: Sure. We are happy to furnish the Committee with ongoing information on the different outcomes, and to return and discuss the final outworkings over the coming weeks.

The Chairperson (Mr Swann): We have already scheduled that into our forward work programme.

Dr Farry: Lovely. I am glad to hear it. I am due back for a general stocktake shortly, and I am sure that the ESF will come up in that. We will see you all in the Chamber in about three minutes for the debate on Magee.

The Chairperson (Mr Swann): That will do well.