Office of the Comptroller and Auditor General - Press release VFM examination report on Local Development Initiatives

Press Release

3 February 2000

Value for Money Report: Local Development Initiatives

The Comptroller and Auditor General, Mr John Purcell, has carried out an examination of Local Development Initiatives

The promotion of development at local level has been the focus of a number of policy initiatives over the last decade. The aim of these interventions is to facilitate an area based approach for economic and social development. The focus of this examination was on three such initiatives; County Enterprise Boards, Partnership and Leader Companies.

County Enterprise Boards were established, under the aegis of the Department of Enterprise, Trade and Employment, for the purpose of promoting local enterprise and economic development. Partnerships were established to combat unemployment and exclusion and ultimately report to the Department of Tourism, Sport and Recreation. Leader companies were constituted under an EU Initiative to promote rural development by supporting local development groups and operate under agreements with the Department of Agriculture and Food.

Public funding totalling ?208 million for the years 1994 - 1998 was provided to these bodies, of which ?127 million was provided by the EU Commission and ?81 million by the Exchequer. EU funding was provided under the Operational Programme for Local, Urban and Rural Development(OPLURD) and the Leader Operational Programme.

The examination looked at specific issues relating to the administrative and operational efficiency of the initiatives, the arrangements for co-ordination between the bodies and approaches to evaluation of their impact.

A report on the examination is being presented to Dáil ?reann today. The main findings of the examination are summarised overleaf.

For further information about the report, please contact:

Jennifer O’Halloran at (01) 679 3122

Main Findings

  • The diversity of activities and different stages of development of the bodies limit the extent to which cross comparisons of administrative efficiency can be made. Administration costs range from 20% to 51% of total expenditure by individual bodies. However, the average percentage is declining as many of the bodies have now reached full operational status.
  • Better Information systems to monitor costs, performance and impact need to be put in place. Some progress is being made in this respect but more work is necessary, particularly, on developing ways of evaluating the impacts of the initiatives.
  • There are many similarities between the objectives, clients and activities of the three development programmes in the area of business supports. The multiplicity of organisations working at local level inevitably means there is a risk of overlap and duplication of effort. In order to minimise the risk, formal interdepartmental agreements as to scope of activity should be concluded with written statements drawn up setting out the broad framework of agreement between the local development bodies.
  • Significant levels of deadweight viz. unnecessary grant assistance to ensure the establishment of a project, have been estimated for County Enterprise Boards and Partnerships. It is clear that there is scope for much greater use of repayable grants, loans and equity to minimise deadweight and such use has the added advantage that any funds realised can be recycled to provide assistance to new projects.
  • Significant levels of displacement viz. replacement of an existing business by a new grant assisted business, have been estimated for Partnerships. Although in some cases displacement can be justified on social and equity grounds, in general, policies should be geared towards minimising the incidence of displacement.
  • While expenditure on the programmes is somewhat behind schedule, it is expected by the lead departments that spending targets will be met for all initiatives.

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