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Tourism and Optimal utilisation of EU Funds Chris Harris December 2008 Supported by the European Union
Experience Nominated for ‘ Scottish Entrepreneur of the Year 2007’ 20 years working with EU funds and policy development based in Scotland Bulgaria Raised over € 150 m for a wide variety of project types, scale, locations, sectors, Worked in NGOs Governments, research, public and private sectors across the EU Specialists in commercialisation of science and technology – KT Training and capacity building to help clients manage their own EU funded projects
FYRM Accession Process ‘The Sun, too, is a star’ You are joining a club and it has rules The Club will give you money to help improve social and economic conditions starting at a regional level, but you have to follow the rules. You are lucky to have good partners in Bulgaria, Gotse Delchev who can help the transition and accession process with you. There are some key ideas and concepts that the European Commission would like you to adopt – ‘Think Strategic and Think Partnerships’
Copenhagen Accession Criteria FYRM Priorities for 2007 -2009 – Total Budget 210. 5 mneuro 1. Support to Institution Building 2. Improve cross-border cooperation 3. Prepare for participation in the Community's cohesion and rural development policy 4. Prepare for decentralised management of EU funds
Financial Allocation Component 2007 2008 2009 Total I – Institution Building 41. 6 39. 9 38. 1 119. 6 II – Cross-border cooperation 4. 2 5. 3 5. 6 15. 1 III – Regional Development 7. 4 12. 3 20. 8 40. 5 IV – Human Resources Development 3. 2 6. 0 7. 1 16. 3 V – Rural Development 6. 7 10. 2 19 Total 2. 1 58. 5 70. 2 81. 8 210. 5
INDICATIVE ALLOCATIONS TO MAIN AREAS OF INTERVENTION Component I (Transition Assistance and Institution Building) Good governance and the rule of law 25 % - 40 % Economic development and social cohesion 10 % - 25 % Ability to assume the obligations of membership 35 % - 50 % Programming Support and Participation in Community Programmes and Agencies 5 % - 15 % Component II (Cross-Border Co-operation) CBC with Bulgaria 22 % CBC with Greece 24 % CBC with neighbouring CCs/PCCs and participation in ERDF transnational/interregional programmes and ENPI sea basins programmes (as appropriate) 54 %
Regional Development Environment Transport 20 % - 30 % 70 % - 80 % Human Resources Development Employment Education and training Social inclusion 40 % - 50 % 30 % - 40 % 20 % - 30 % Rural Development Priority 1 50 % - 80 % Priority 2 (not foreseen for the present MIPD) Priority 3 20 % - 50 %
The Key Funds Pre Accession Instrument (IPA) IPA is the key instrument for countries aspiring to join the European Union for the period 2007 -2013. It is based the lessons learnt from previous external assistance and pre-accession instruments. The aim of the IPA is to enhance the efficiency and coherence of aid by means of a single framework.
IPA - Aims Support for transition and institutionbuilding aimed at financing capacitybuilding and institution-building Cross-border cooperation - with the Member States or within the framework of cross-border or inter-regional actions.
IPA cont Regional Development, aimed at countries' preparations for the implementation of the Community's cohesion policy, and in particular for the European Regional Development Fund and the Cohesion Fund ; Human resources development, which concerns preparation for cohesion policy and the European Social Fund ; Rural Development, which concerns preparation for the common agricultural policy and related policies and for the European Agricultural Fund for Rural Development ( EAFRD ).
Forms Assistance Investment, procurement contracts or subsidies; Administrative cooperation, involving experts sent from the Member States; Action by the Community acting in the interest of the beneficiary country; Measures to support the implementation process and management of the programmes; Budget support (granted exceptionally and subject to supervision).
Convergence with Structural Funds ERDF to help: cultural and natural heritage, develop accessibility and mobility related infrastructure promote ICT, innovative SMEs, business networks and clusters, higher value added services, joint cross-border tourism strategies inter-regional exchange of experience
Convergence with Structural Funds ESF to help: Educational programmes and training in order to enhance productivity and the quality of employment and services in the tourism sector. Labour Market quality and flexibility Horizontal Themes FP 7 research on information and communication technologies, satellite applications, cultural heritage and land use.
Cross Border Co-operation with Bulgaria To improve and extend existing or create new links among local/ regional administrations, associations, NGOs or enterprises to enhance economic and social development of eligible border regions; To improve tourism and transport infrastructure with a view to increase the potential for the development of tourism as well as, in line with or apart from it, to contribute to the protection of the environment. To intensify contacts at local level among citizens from inside and outside the EU To help with programme implementation and to contribute to timely delivery of results.
Key Tourism Development issues Think global Quality issues Act local Awareness raising Competition and competitive edge Partnerships & Stakeholders ‘Eco’ Tourism & sustainability Economy/markets Horizontal Themes - environmental sustainability equal opportunities, social inclusion
EU Tourism Policy EU Tourism policy to support actions at national regional and local levels with many tourism projects supported by EU funds. Key issue is the tourism relationship between EU, National, Regional and Local. Mainly dominated by SMEs, it accounts for 4% of the Community’s GDP, with about 2 million enterprises employing about 4% of the total labour force (representing approximately 8 million jobs. Besides growth and jobs creation, tourism plays an important role in the development of the vast majority of European regions. Infrastructure created for tourism purposes contributes to local development, and jobs are created or maintained even in areas in industrial or rural decline, or undergoing urban regeneration. ‘A RENEWED EU TOURISM POLICY: Towards a stronger partnership for European Tourism’ 2005
Lisbon Strategy A new policy approach is being developed, linking tourism to the ‘Lisbon strategy’, which seeks to stimulate European competitiveness and growth. European Agenda 21 for Tourism - Sustainable tourism plays a major role in the preservation and enhancement of the cultural and natural heritage in an ever expanding number of areas, ranging from arts to local gastronomy, crafts or the preservation of biodiversity.
Principles for the EU Funds De-centralisation – PARTNERSHIPS! Transparency financial management Management control of specific measures project selection procedures Sharing Information Concentration of resources Responsibility Value for Money Monitoring and Audit
Key principles the EU promotes on best practice Responsibilities need to be defined and divided between those involved in the programming, those managing the measures and those paying for them; Information networks need to be set up to collect and transmit data for monitoring; The responsibility of all those involved needs to be increased to improve transparency of financial flows; Scope for initiative needs to be widened to improve operational efficiency and simplify procedures
‘Towards inclusive and responsible partnership’ ‘DG Regio’ Brings together ALL those organisations involved in the programming and management of European Structural Funds leading to economic and social development. Includes Bulgarian Govt, European Commission and other relevant public authorities, at regional and local level for instance, economic and social actors, designated by the national authorities in accordance with the rules and practices in force.
The EC view of partnerships ‘Its the commitment and necessary consensus between the various parties involved to achieve through ongoing dialogue throughout the programming process. They are indispensable prerequisites for the success of any development action. ’
Scottish Experience The East of Scotland European Partnership (ESEP) established in 1995 is a network of 300 local organisations working together to achieve the best use of European Structural Funds. The Partnership includes representatives from a host of public agencies and umbrella organisations (all not for profit) which are engaged in varying ways in economic and social development. The Programme Management Executive (PME) a central part of ESEP was established to support the Partnership.
What is a Public Private Partnership (PPP) A cooperative venture between the public and private sectors, built on the expertise of each partner, that best meets clearly defined public needs for the purpose of delivering projects or services traditionally provided by the public sector through the appropriate allocation of resources, risks and rewards.
Whose at it! Europe: United Kingdom, Ireland, Netherlands, Germany, Portugal, Spain, France, Hungary, Poland, Czech Republic, Romania, Bulgaria Outside Europe: United States of America, Canada, Japan, Australia, South Africa, in most of the third world countries supported, initiated by UNDP, GTZ etc.
Main Direct Applicants Public sector Local and regional authorities (e. g. municipalities) State authorities, governmental bodies Non – profit sector NGOs (e. g. environmental, social enterprise, labour market etc. services) Associations Foundations (under specific conditions)
Indirect/Partnership applicants or beneficiaries Private sector Corporations (e. g. companies, corporations) SMEs (e. g. grants, equity financing, investments) Banks and Investment Funds
Pre Conditions for PPPs Ensuring open market access and fair competition (state aid principles) Protecting the public interest and maximising added value to citizens Defining the optimal level of grant financing needed Social Contracting
Why PPP? To help cover the enormous financing requirements needed to develop the country across all sectors. Mobilization of all economic and social actors Increases value for money/leverage Improves quality of services and infrastructure Increases the social and economic sensitivity of development and addresses risk and market failure more effectively. Makes planning and implementing economic development more ‘inclusive’ Helps to move into contracting culture sustainable in long term Helps address State Aids and Additionality Risk sharing
Key features To provide additional capital (additional resources for financing) To provide alternative management and implementation skills (expertise of private partners) To provide value added to the consumer and public at large (more, new or better services) To provide better identification of needs and optimal use of resources To provide better allocation of risks To provide more transparency and openness of the process
Key features (continued) To provide innovation and transfer of expertise To provide new business opportunities and employment synergies To provide new division and opportunities of labour To enable public authorities closed to the citizens To maintain high levels of quality, security and safety To ensure consumer and user rights To monitor and to evaluate the performance To provide legal certainty PPPs imposes constraints on projects and applicants, given the Commission’s, overriding requirement to protect the use of grants in the public interest and ‘Best value’.
Types of PPP n Design-Build (DB) - The private partner provides both design and construction of a project to the public agency. This type of partnership can reduce time, save money, provide stronger guarantees and allocate additional project risk to the private sector. n Operation & Maintenance Contract (O & M) - A private operator, under contract, operates a publicly-owned asset for a specified term. Ownership of the asset remains with the public entity. n Design-Build-Finance-Operate (DBFO) - The private sector designs, finances and constructs a new facility under a long-term lease, and operates the facility during the term of the lease. The private partner transfers the new facility to the public sector at the end of the lease term. n Build-Own-Operate (BOO) - The contractor constructs and operates a facility without transferring ownership to the public sector.
Types of PPP n Build-Own-Operate-Transfer (BOOT) - The private partner builds a facility to the specifications agreed to by the public agency, operates the facility for a specified time period under a contract or franchise agreement with the agency, and then transfers the facility to the agency at the end of the specified period of time n Buy-Build-Operate (BBO) - Form of asset sale that includes F rehabilitation or expansion of an existing facility. The government sells the asset to the private sector entity, which then makes the improvements necessary to operate the facility in a profitable manner n Operation License - A private operator receives a license or rights to operate a public service, usually for a specified term n Finance Only The private party finances the construction or expansion of a public facility in exchange for the right to build residential housing, commercial stores, and/or industrial facilities at the site
When to consider PPP If the service or project can’t be provided with the financial resources or expertise of the government or municipalities. If the quality, range or the scale of public services can be improved through involvement of private partners If the service or project can be implemented faster If the service or facility can be provided more cost effectively or politically beneficial
When PPP is appropriate If there is support from the users of the service for the involvement of a partner If there competition among prospective private partners No legal restriction to involve private partners If the project or service provides an innovation or new service If there is track record of partnership between public and private sectors with opportunities to foster economic and social development
PPP Structure (1 meuro example) Market failure/Quality • Risk profile • Operational controls • Best value • Transparency • Addionality • Contract/SPV
Risks with PPPs Loss of control and administrative power by governmental institutions or authorities Increased costs – e. g. new charge or toll system long term credit Political risks Reduced quality or efficiency of service Inability to benefit from competition Unreliable service Mismatch in expectations between public and private sector Consumer disapproval Failure in the structure of partnership – mismanagement, disagreements between parties, changed priorities, economy
Features of PPP contract/agreement Very detailed (100 -200 pages plus annexes) depending on complexity of project. Contract/agreement needs to take account of every conceivable issue. Takes time to get right Negotiation complex Needs government approval as it uses public funds
Private Sector Motivation?
Risk v Return Higher the risk bigger the return - profit margin Sufficient/sustained demand (long, medium and short term gains) Speed of return Strong viability (limits to risk taking) Strong political commitment (recognising market failure v quality required to raise standards)
Pre contracting Process Risk analysis for each partner Identification of the main indicators for risk analysis (case studies) Weighting of indicators for risk analysis How risk analysis can be carried out Distribution of risks between partners/ parties involved in Public-Private Partnership (risk allocation) Feasibility Study
Tender Process Selecting a procurement process Preparation of the tender documents concerning the specific procurement procedure (legal document particularly if it involves OJEC tender. Carrying out the tender Evaluation of the proposals/ applications (based on evaluation/ selection criteria) – analysis and ranking of proposals Selecting a most suitable private partner Contract negotiations concerning the responsibilities as well as objectives to be achieved by each partner. Preparation of application (ESF/ERDF) Finalisation of PPP contract
Ongoing management issues of the PPP contract Communication between partners Reporting requirements to funders Financial control External Evaluation Conflict Management Ongoing monitoring/reporting/audit Dissolving of partnerships
Key EU Compliance Issues State Aids Additionality Procurement Financial Control/Claims Audit Management Transparency Performance Reporting and Monitoring Document control – 7 year rule
Vision for the East of Scotland Regional economy ‘To create a dynamic, innovative and competitive East of Scotland Programme Area where people and businesses are well equipped to face the challenges of new and emerging European and international markets’
Scope of Eastern Scotland European Partnership East of Scotland NUTS II 250 million Euros 2000 -2006 (grant) East of Scotland population 2, 400, 000 Priorities (Axes) Creating a strong internationally competitive economy in the East of Scotland Building Regional capacity and promoting and marketing the strategic sectors in the East of Scotland Community Economic Development
Scottish Programmes 2007 -2013 Following the Lisbon Strategy for Growth and Jobs 2 Programmes for Scotland: Objective 1 Highlands and Islands € 158 m Objective 2 (formerly) Lowlands Scotland € 570650 m Proposed ERDF priorities: 1. Enterprise Growth 2. Community Regeneration 3. Rural Development Proposed ESF priorities 1. Progressing into Employment 2. Progressing through Employment 3. Access to Lifelong Learning
Management of Funds in the East of Scotland European Commission Scottish Executive Local Government Social Enterprise Sector Further Education sector Higher Education and research sector Scottish Enterprise Chamber of Commerce CED partnerships
The Difference Between Structural Funds and Community Initiatives such as PHARE, Leader Plus, Urban, Equal etc are designed to address very specific issues including pilot projects/test beds for activity (generally small scale and short term) which, if effective, are mainstreamed into the Structural funds. Structural Funds are aimed at reducing disparities between regions. They promote sustainable economic development in regions which are lagging behind or in decline and tackle long term unemployment and social inclusion. They are therefore large scale and long term
Scottish Experience Heritage and Culture – Roman antiquities, Industrial heritage, natural environment. Tourist Boards on a national, regional and local level ‘Gems’ of Midlothian – connecting diverse tourist attractions into one package. ‘Falkirk Wheel’ Largest single investment by ERDF Set targets – turnover, increase tourists, increase range of attractions, Increase market share EU, target key areas, Addressing economic inactivity and regeneration (eg the social economy)
Scottish Experience Cycling and walking networks Gastronomy – Food and Drink Festivals/shows Holiday centres Accommodation Golf Tartan Built heritage – castles, houses Natural environment Clean energy
Scottish Tourism Policy • identifying our future markets, both domestic and overseas • addressing the decline in the Scottish market • improving and maintaining quality • maximising Information Technology • boosting tourism in the remoter areas • extending the season • improving training and skills standards • providing the products to meet market expectation and demand • making Scotland more accessible • making sure our tourism industry is environmentally sustainable • the method of funding Area Tourist Boards
Project Concept to Application What is the project idea? Determine why the project is needed – need/opportunity? Is it supported -by who and how many? – ‘The Partnership’ Business Plan/justification? Does it fit with the chosen OP priorities – read the OPs and support docs and compliance rules etc Develop the ‘logical framework’ for the project – Project description, methodology and goals Project Implementation Plan Costs and resources Measurable deliverables/outputs Risk, contingencies/monitoring Evaluation Publicity (an EC favourite!)
Some of our clients European Commission- DGs Regio, Research, Employ UK Government Scottish Executive Roslin Institute Edinburgh University Oxford University Moredun Research Institute Sanger Centre Scottish Enterprise 30 SMES all technology sectors 32 UK Municipalities Motorola NEC Volvo INRA DIAS University of Bonn FBN University of Munich China Agricultural University UNDP Ministry for Regional Medical University of Sofia Development and Public Works
Contact Details chris. [email protected] co. uk