IRELAND 23 November 2017
Value for Money Examination 01: The LEADER Programme Summary
- The LEADER programme was established in 1991 under the management of the Department of Agriculture, Food and Forestry. It was an innovative scheme under which individual area-based groups drew up business plans for their areas, to be funded from public and private sources.
- A total of ?34.7m was provided jointly by the EU and the Irish Exchequer to fund sixteen groups accepted for inclusion in the programme. Groups functioned independently in managing the implementation of their business plans, within guidelines specified by the Department.
- The specific objectives of this value for money review were:
?to examine the efficiency of the administration of the LEADER programme and
?to examine how the effectiveness of the LEADER programme is evaluate
Management of the LEADER Programme
The Department of Agriculture, Food and Forestry
The Department succeeded in a relatively short period in establishing a suitable and reasonably efficient system of administration and has been economical in the use of staff and other resources in the management of the LEADER programme.
However, we found that there was inadequate inspection of some groups. Since there is almost total delegation of decision making, regular inspections are essential. (Paragraphs 2.12 to 2.14)
All the funds allocated to groups have been committed but it seems that not all the projects which received funding commitments will have been completed by the 31 December 1994 deadline. However, the Department has assured us that 90 per cent or more of the available public funding will be used by groups. (Paragraphs 2.28 to 230)
In our opinion, the management information systems maintained by the Department in relation to the LEADER programme were inadequate because:
?they did not generate accurate records of outstanding project funding commitments and
?there were delays in the compilation of monthly data for the programme as a whole.
However, the Department maintains that these deficiencies did not materially affect the management of the programme. (Paragraphs 2.15 to 2.20)
The Monitoring Committee established to oversee the programme had a membership of over forty which made it unwieldy as a decision-making authority especially since it operated on the basis of consensus. It did, however, operate effectively as a method of communication between the groups, on the one hand, and the Department and the EU, on the other. (Paragraphs 2.35 to 2.40)
Administration by Groups
Administration at group level was reviewed, and in order to inform our review, four groups were visited. The likelihood is that the practices observed in the groups visited are also to be found among other groups. The principal matters noted were:
?Some groups were found to have assisted projects of a kind specifically excluded in Departmental guidelines e.g. development of golf courses, new tourist accommodation and retail services. To achieve this, groups invoked a flexibility clause in the guidelines which the Department maintains was not designed to allow assistance for projects of a kind specifically excluded. (Paragraphs 2.50 to 2.52)
?In three of the groups visited by the audit team, it was noted that some of the projects grant aided were promoted by Board members or by persons with whom they were closely connected. Where projects are both promoted and administered by the same persons, a potential conflict of interest exists. (Paragraphs 2.47 to 2.49)
?Many project proposals could have been better analysed by groups before commitments to funding were given. Assessments in some cases were informal and did not involve production of reports. (Paragraphs 2.53 to 2.55)
?Some groups appear to have had difficulty in finding suitably qualified persons to inspect projects. In a number of cases, inspection reports were informal and lacking in detail, or were not recorded on file. (Paragraphs 2.57 to 2.59)
?Cost overruns occurred on some projects, perhaps due to inadequate analysis at the approval stage. (Paragraphs 2.60 and 2.61)
?There were deficiencies in relation to vouching of expenditure on a number of projects. . (Paragraphs 2.62 and 2.63)
Overlap with Other Scheme
- The LEADER programme provides assistance for activities which may also be subvented under schemes operated by other agencies. These include industrial development agencies, tourism development agencies, FAS, County Enterprise Boards and Area Based Partnerships. This leads to:
?risk of duplication of assistance
?actual administrative overlaps with consequent cost implications. (Paragraphs 2.70 to 2.87)
Evaluating the Effectiveness of LEADER
The Department has the responsibility to evaluate the effectiveness of the LEADER programme and to put in place systems, procedures and practices to enable it to do so.
Appraisal of Business Plans
- Business plans submitted by groups for inclusion in the LEADER programme were assessed by a consultant employed by the Department. While the combined thrust of the plans of groups selected for LEADER funding was consistent with the overall objectives of the programme, the consultant concluded that a number of the groups selected had plans which:
?were vague and not related to clearly defined sectoral objectives and strategies
?were without quantified targets
?had unachievable objectives. (Paragraphs 3.13 to 3.15)
Targets for Achievement
The LEADER programme had both economic and community development objectives but no specific targets were set at the outset of the programme, either by the EU or by the Department. Furthermore, few groups specified targets or measures of impact in their business plans. The lack of clear targets for the programme, at both national and group level, makes it difficult to focus activities to achieve results. (Paragraphs 3.16 and 3.17)
Monitoring of Progress
The absence of clear targets also makes it difficult to identify the information needed to allow the effectiveness of the programme to be monitored on an on-going basis. In general, groups did not gather relevant data upon which evaluations of programme effectiveness might be based. Neither the Department nor the Monitoring Committee sought regular information from the groups on the impact of measures undertaken to meet the groups' objectives. (Paragraphs 3.18 and 3.19)
Evaluation of the Programme
An evaluation of the LEADER programme commissioned by the Department was published during 1994. The general conclusion of the evaluation was that LEADER was a valuable programme which had attained a considerable degree of success in addressing the general aims of rural development.
The evaluation sought to measure the economic impact of the programme in terms of:
rate of return on the project investment and
The rate of return measure could not be calculated because of inadequacies in the Project databases assembled by most groups. (Paragraphs 3.21 and 3.22)
- Employment creation was used by the evaluator as the main indicator of economic achievement of the LEADER programme. The main conclusions about employment creation drawn by the evaluator were:
- Groups claimed that the number of persons employed up to 31 December 1993 attributable to LEADER projects totalled 2,558, of which almost 60 per cent were employed on a part-time or seasonal basis. It was estimated that this was equivalent to 1,445 full-time jobs
- Internal inconsistencies and problems of definition in the job creation figures
- claimed by groups suggest that a more accurate level of employment attributable to LEADER would be nearer to 800 full-time jobs than the 1,445 claimed.Broadly equivalent results were achieved in terms of claimed employment by groups spending, on average, 51 per cent of project funding on rural tourism, compared with an average of 20 per cent spent on small enterprise projects. (Paragraphs 3.23 to 3.27)
- The evaluator found that there is a risk that projects assisted by LEADER groups might proceed anyway without grant aid. This raises the question of whether the aid could be better targeted and of its value as an inducement to entrepreneurs. In a limited survey, nearly 40 per cent of promoters said their projects would have gone ahead without grant assistance. (Paragraph 3.29)
- The evaluator identified a further risk that projects assisted may displace existing viable economic activity, particularly outside the target region.
Conclusions on Evaluation
- Evaluation of the LEADER programme was hampered by:
- The Department's evaluation was undertaken at a time when it was too early to capture the full impact of the scheme, and this is acknowledged in the evaluation report. Nevertheless, it was a worthwhile exercise and provided an early assessment of progress on the programme. In order to get full value from expenditure on evaluations, careful consideration needs to be given to their timing. In the case of LEADER, a full economic impact evaluation might best be undertaken in early 1996 when all projects have been in operation for some time and their impacts may be more realistically assessed. Such an evaluation would contribute to the mid-term review of the LEADER II programme. (Paragraphs 3.6 to 3.8) Future evaluations should attempt to measure the success of the programme in sustaining employment in local areas, as well as the degree to which undesired effects have occurred e.g. assisting projects which would have proceeded anyway or displacing existing economic activity by grant-aided projects. (Paragraphs 3.28 and 3.29)
- While developmental goals such as structural adjustment and empowerment may be difficult to gauge, they ought to be addressed. Otherwise, the achievement of one of the core objectives of the programme will not be assessed. Indicators of success in these areas should be agreed, and monitored on an on-going basis or by means of surveys and inventories of community development activity. (Paragraphs 3.30 to 3.34)
- The objectives of the LEADER programme overlap with those of other area-based programmes. Consequently, assessment of development impacts of all area-based initiatives might be undertaken as a unified exercise.
?the absence of clear targets for the programme at both national and group level and
?failure to establish and maintain data collection systems designed to facilitate both on-going monitoring of the programme, and ex-post evaluation.
If lessons are to be learned which will inform the rural development measures of the future, it is necessary to ensure that attention is given to putting in place the systems, procedures and practices which will generate the data upon which successful evaluation will ultimately depend. (Paragraph 3.37)