Tacis Programme: ECC Report

HL Deb 22 April 1999 vol 599 cc1303-32

7.48 p.m.

Baroness Hilton of Eggardon rose to move, That this House take note of the report of the European Communities Committee on Partnership and Trust: The Tacis Programme (33rd Report, Session 1997–98, HL Paper 157).

The noble Baroness said: My Lords, this debate relates to a report from the environment committee of your Lordships' House in relation to one of our more interesting studies. It made a welcome change from landfill and drinking water. The report was published in January and concerns environmental aspects of the Tacis programme. The Tacis programme is the European Union's fund for technical assistance to the former states of the Soviet Union and Mongolia. During our inquiry, a few of us visited Ukraine and Russia. I resisted the temptation, which would have drawn heavily on the funds of the House, to suggest that we went to Mongolia.

The funding for Tacis has built up gradually over the past few years. In 1997, the last year for a complete picture of the finances, it was £342 million, which constitutes about half a per cent of the European Union's budget.

This inquiry was in some ways a sequel to the report of the committee in 1995 under the chairmanship of the noble Lord, Lord Lewis, when we examined the PHARE programme of the European Union and its aid to the east-European countries. Unlike the PHARE programme however, the Tacis programme does not have the environment as a separate budgetary heading; it is merely one of a number of objectives within the programme such as increasing levels of democracy. However, we found many similarities with our previous inquiry; for example, the lack of staff in the European Commission and the over-reliance on paper systems and outside consultants.

The Russian Federation consists of 15 per cent of the world's land mass and, if we include the other NIS states, it amounts to almost 20 per cent. It has an appalling legacy of environmental degradation, partly due to poorly managed industrial activity. This environmental degradation is of great significance to the whole world. It affects biodiversity, climate change and trans-boundary pollution. Economic growth is, of course, essential, as is the reduction of the disparity between rich and poor, not only within the Russian Federation but within and between other nations of the world. But it is vital that economic growth should not take place to the detriment of the environment.

As in our previous inquiry, we found a situation of considerable complexity, and there were other similarities. There was throughout too much reliance on western experts and insufficient use of local skills. Eastern Europe, Russia and the other countries of the old Soviet bloc have highly trained scientists and engineers; they are not, as they said bitterly to us, a third-world country. They resent the often patronising attitudes of western experts. We tend to assume that we have all the answers whereas in many ways there are parts of the old Soviet bloc which have aspects which we should perhaps be admiring—the tendency for group solidarity and, in the past, good public services.

The imposition of inappropriate off-the-peg solutions by western experts and the over-rapid introduction of a market economy in some ways has contributed to the current financial crisis in Russia. There has been a consistent failure to take into account social and psychological factors that have been brought about by a command economy.

Our inquiry and report last year was set against a background of growing crisis in the Russian Federation and a rapidly changing situation. Inevitably our report therefore can only be a snapshot which was more or less true at the time but will have less relevance as the months go by. One of the reasons for holding our inquiry last year was that the European Commission was drafting a new Tacis regulation to cover the years 2000 to 2006, a seven-year span, and we hoped to influence what went into that new regulation. The Commission's proposals were published shortly before our report, but we had made considerable efforts in Brussels and elsewhere to describe our findings to them and hoped that that would have some influence. However, there is little sign that we made much impression on the Commission, and that is deeply disappointing.

It acknowledges the existence of some problems we identified—too much bureaucracy and over-reliance on western consultants; secretive tendering procedures; and the swamping of other environmental concerns, especially in the Ukraine, by the problems of nuclear safety post-Chernobyl. In fact, when we visited Kiev, the only decently equipped office and government ministry we went to was furnished from Tacis funds. We were surrounded by computers and telephones and a whole host of modern technology. It was only at the end of the meeting that we realised that this in fact was the nuclear safety control centre and that was why it was so well equipped.

The Commission's proposed solutions to the problems that we found are to have fewer and larger contracts to western consultancies. We were firmly of the opinion that the small projects that we saw which built up individual trust in relationships were the ones that were successful. We were not happy about the way that funds are constantly circulated to western consultants and we felt that they do not have a great deal of effect within Russia or the other countries.

We were particularly impressed by the enthusiasm of some of the individuals that we met in NGOs and also the young manager of the water treatment plant at St. Petersburg who had been attached for several weeks or months to organisations in this country. We believe that the system of transfers and exchanges of individual experts in that way is the most promising way forward. We were also impressed by the small-scale so-called "Bistro" projects where funding could be arrived at with rapidity and be directly relevant to what was needed rather than the sometimes two or three-year timelag in getting other projects off the ground.

We were also impressed by those involved in the city-to-city projects where local authority officials with specific expertise in areas such as public transport or sewerage systems had built up relationships over many exchange visits with their counterparts in particular Russian cities. It is that development of trust and individual knowledge that seems to underlie the successful projects. In fact the leitmotif of our inquiry was the question of trust and distrust.

There remains the ghost of the Cold War distrust of each other hovering over many of the projects. In Russia and the Ukraine there was a natural suspicion of the motives of westerners and the assumption that there is an element of triumphalism, particularly relating to aid from the United States, which they bitterly resent. They have of course also been reared in a dictatorship, which makes them distrustful of authority, and in a command economy where on the whole orders came from above, and they have little experience of taking personal responsibility.

Many of the new colonialist attitudes of western consultants and western nations, and the tendency of western consultants to produce inappropriate remedies for their problems, have not helped. In fact, democracy and market economy are now insulting words in many quarters in Russia.

In the European Commission also there was considerable suspicion as to what may be happening to European funds. They are naturally worried about being criticised, but the consequence is that there are enormous bureaucratic controls, a reluctance to take risks and a fear of the sprawling confusion of the NIS and the possibility of Mafia corruption. The consequence is that the Commission in Brussels goes to ridiculous lengths with an excessive reliance on paperwork and on monitoring units in the Ukraine and Russia which rely essentially on ticking boxes on pieces of paper which are then sent to Brussels. They are placed on files which I am sure no one ever reads, but the system provides the comfort of the feeling that the situation is being monitored.

In the Ukraine, for example, there are 40 staff; 20 are western Europeans, 20 are local Ukranians. They are all responsible for monitoring the Tacis projects, not only in the Ukraine but also in Belarus and in Moldova. But having 40 people doing nothing but allegedly evaluating the projects in those countries seems an excessive use of Commission resources. Of course I have considerable experience of working in an elaborate and over-anxious bureaucracy and am familiar with the sense of comfort there is in building up a large file about something. But it does not mean that anyone ever reads it or that it actually serves any useful purpose.

The recent eco-scandals in relation to other aspects of European aid where money was diverted from the actual practical projects into payment for administrative staff is another indication, as we noted in the PHARE report, that the Commission does not have enough staff to manage projects properly and therefore has to resort to mechanistic form-filling or to hiving off its responsibilities to western consultancy firms, or to forms of creative accounting. Far better in my view, and I believe that of most members of our committee, that small amounts of western money should be siphoned off through fraud on a proportion of small projects in Russia than these over-elaborate attempts to control large projects to little end.

The Government's response to our report, which was received last month, is generally positive and welcoming, though reservations were expressed about the viability of small programmes and the Commission's need for more staff. One of our recommendations was that Tacis should have a comprehensive database of programmes of aid, with evaluation data of those programmes already completed. It is astonishing that there is no such proper comprehensive database so that they can look back at their past projects and examine them and from that learn to proceed to future projects. Also included in that comprehensive database should be the other forms of aid which are being given by various organisations such as the EBRD and also bilaterally to individual countries such as the know-how fund. At present, none of the donors actually knows what other projects are being funded. There is a considerable possibility of overlap, duplication and indeed gaps between funding.

Present knowledge of other aspects of funding and liaison seem to be dependent on individuals going to meetings about every two or three months and having ad hoc conversations about what other aid is being given. That does not seem to be a very organised way of developing aid, either to Eastern Europe or Russia, or indeed to other parts of the world. I have asked the Minister to give us the Government's view on this particular point, which was not covered in their original response. We welcome the Government's intention to ensure that the environment does not get squeezed out of the new Tacis regulation and their recognition that, economic policy reforms … can contribute to environmental improvement.

In a stressed and over-populated world with increasing levels of disparity between rich and poor, it is very important that we do all we can to reduce economic disparity and to increase democratic accountability. Unless we establish common standards of health and wealth and a pollution-free and thriving environment, the world will continue to become more degraded and more subject to political violence; and, indeed, to wars, probably, in the future, over water and scant resources.

It is a matter of enlightened self-interest to promote standards such as these, not only in eastern Europe and in Russia but also in other parts of the world as markets for our own goods, to put it at its lowest level, but also, at its highest level, to ensure that there is peace in the world and that we can obtain Russian assistance in places such as Serbia and Kosovo to ensure that the world continues.

Finally, I should like particularly to thank our Clerk, Tom Radice, who put together our splendid report and who was also responsible for the splendid photograph on its front cover. I should also like especially to thank our adviser, Mr. Andrew Convey, for arranging the Russian translation of part of our report, which we see as importantly symbolic of our recommendation that Russia and the other states should be treated as equal partners and not as dependent clients. I commend the report to the House.

Moved, That this House take note of the Report of the European Communities Committee on Partnership and Trust: the Tacis Programme (33rd Report, Session 1997–98, HL Paper 157).—(Baroness Hilton of Eggardon.)

8.2 p.m.

Baroness Park of Monmouth

My Lords, I envy and admire all those who are responsible for this most interesting and valuable report. I am grateful to the noble Baroness, Lady Hilton of Eggardon, for giving us the opportunity to debate it. It has many lessons for us which apply and have applied for a long time to the operations of the European Union in general. First, perhaps I may say that I agree with the report's claim that, the value of Tacis, as a means of building trust and mutual respect and as a vehicle for sharing know-how, may well outweigh many of the shortcomings of policy and administration to which attention is drawn in this report". The measure of its success is the quotation from Mrs. Sue Mullan, European Service Manager, Southampton City Council, who said: One of the things they said at the very end of the project was, 'You didn't give us the fish but you gave us the net with which we could catch the fish'". That struck me as very significant.

The report is full of fascinating accounts of the varied activity being carried out under the aegis of Tacis in the newly independent states (NIS). About them I shall only say that I strongly agree with the committee's preference for grass-roots participation, twinning, the building of trust between individuals, and the expansion of smaller programmes, with the people at the bottom of the heap having nowhere to go but up. After all, this is what subsidiarity should mean. The title that the committee has given to the report, Partnership and Trust, says it all.

As the report makes clear, one of the most important things that Tacis can do is to give the peoples of the NIS confidence in their capacity to shape their own lives—a position which would be the very antithesis of the command economy under which they lived for so long. For that, they need skills, and horizontal as well as vertical thinking: they have to believe that we and they are equals in the same world.

One of the most significant and positive things that the committee has done is to have its opinions—essentially its recommendations to Parliament—translated into Russian, so that the people whom they have met, and all those involved in the Tacis programmes in the NIS, may read them and, presumably, respond. I hope that they will. At the very least, this is a lesson in transparency and in subsidiarity.

However, much of the value of Tacis will be lost if the peoples of the NIS encounter in Brussels the very same faults of opacity, incompetent management, bureaucracy, sometimes croneyism, and even a degree of corruption, with which they have been all too familiar at home in the past and which Tacis purports, in promoting good governance, to be there to eradicate.

The committee, rightly, stresses the importance of reviewing and strengthening staff resources and competence, notes that there are too many generalists in DG1A, the responsibility directorate; and argues for more and better training. In arguing also for the need for the new Common Service Directorate to devise, a coherent and seamless relationship between monitoring and evaluation". it is arguing for the need for really competent staff to carry that out. The Commission has always inclined in the past to skimp on permanent staff at the working level who are actually well informed enough to implement policy and to manage resources; and who stay there long enough to achieve both continuity and expertise. Quite a small core of long-serving and expert staff could go far to avert the delays and, indeed, total inertia which have afflicted so many ambitious and worthy new projects.

As Mr. Erkki Liikanen, the commissioner responsible for budgets, told Sub-Committee A on 26th January this year: When we analysed the situation in 1997 we found we had 47 different procedures for applications for external aid. Why so? Actually it was not always invented by the Commission. For instance, when the Commission proposed a Tacis regulation for Russia to make the procedures simpler and clearer, some southern countries wanted to make it more complicated. When we have a programme in the south, the northern countries may do exactly the same. The whole regulation can become so complicated it just cannot function. Then they want to create committees and so forth. So we had 47 different procedures, a huge number of committees, and everybody is happy, and travels, but nothing functions". Fortunately, he went on to add that there was now a joint service for external programmes and that it might be possible to cut the procedures from 47 to seven, but then it was going to take between 18 and 24 months to get the revised regulations through the Council.

Fortunately, I note from the report of the committee, (HL Paper 23) on reforming comitology that there is only one comitology committee dealing with Tacis, the Tacis Management Committee, which met five times in 1997, reviewing Tacis operations. Perhaps I may point out that many of the comitology committees of the EU, in a list covering 62 pages, did not meet at all in 1997. I hope that the Tacis committee's deliberations were useful.

One of the problems which so extensive a programme presents is the great diversity of peoples and situations in the countries of the NIS, as the report points out. They range from the very sophisticated, mostly urban, to the people in the remote country areas. While I agree that, because of the collapse of the whole Soviet bureaucratic highly centralised machinery of government, there is a strong case, as the new draft Council regulation (Corn (98) 753. Final) argues, for Tacis to move towards the reinforcement of democracy and the development of good governance, I believe that the Commission is wrong to wish to concentrate on high level policy advice and on large projects and that it is in some danger of hopelessly over-extending its remit in moving now to, institution building, social welfare and the rule of law". It contemplates dealing with the social consequences of transition, including restructuring the social welfare system. As the Committee of Independent Experts on Fraud and Mismanagement says: The Commission has been transformed from an institution which devises and proposes policy into one which implements policy". In effect, it is proposing to take on a kind of colonial administration's role and is, I fear, about as well fitted to do it as Belgium was to manage the Congo.

The committee's instinct, with which I whole-heartedly agree, is for, a very practical, pragmatic, individual approach which respects the people we wish to help". It is exemplified by twinning, by attaching individuals to Western organisations, by small projects building from below or providing specific expertise and by local initiatives which involve citizens in improving their own environment. Every instance the report gives of the personal experience of such bodies as the Mendip District Council reinforces that view.

I digress for a moment to mention the important issue of the environment. I find it frightening to read that radioactive pollution affects 9 million people in Russia, the Ukraine and Belarus. Incidentally, according to a recent report from Novaya Zemlya, 120,000 tonnes of first-generation chemical weapons dating from World War II are buried in that region with disastrous effects on the health of the people. This is quite apart from the 40,000 tonnes of second-generation chemical weapons not yet disposed of. But as all those were part of the military chemical complex, little is known of the consequent damage to the environment and to health. I hope that Tacis will be able to pursue this.

The committee has identified another aspect of the Brussels environment in which DGIA operates which is only too familiar to us all; namely, the dangers of a lack of transparency. As the committee says, the directorate itself is remote, understaffed and lacking in transparency. This too will be all too familiar to many of the citizens of the former Soviet Union in particular. It must be fought and the committee's Recommendation 4 recognises that. Lack of transparency in its turn will foster suspicions of cronyism, if not corruption. Russians are sensitive and proud; they are also shrewd and they will observe the Commission closely. It is deeply unfortunate that the very size and complexity of the Commission makes it so difficult—even if the will is there—to make its fiscal credentials credible. It has been so obvious for so long that money is being mismanaged, at the least, and that will destroy confidence, not least that of the taxpayers of the EU. Our own contribution to the EU is £8 billion after abatement, yet we have little idea of what we are paying for, although I fervently hope that the new scrutiny committee will change that.

However, it is still deeply shocking that there have been major reports on financial control and fraud in the Community from this House in 1989 and 1994, all calling for the regulations to be simplified, for effective internal controls to be established, and for better training of staff. In 1994 a Treasury official actually believed that UCLA, the anti-fraud unit, was, powerful and determined to carry out DGXX's audit function". As recently as 26th May last year, member states signed the convention on the fight against corruption involving officers of the European Community and officials of the member states of the EU. But, as a former British member of the Court of Auditors said as far back as 1994, and as the Committee of Independent Experts confirmed in its March 1999 report, the single biggest problem about financial management in the Community today is the lack of accountability at senior level in pretty well all the institutions of the EU". That report also incidentally reinforces the committee's views on the dangers of too many temporary, short-term and agency staff, and about the evil effects of opacity in tendering. It is a sorry commentary on the elephantine, or perhaps I should say "sloth-like", progress of the Commission, even on the vital issue of the public perception of its integrity, that it took a courageous whistle-blower in late 1998 to get an inquiry set up. We have yet to see whether any action will be taken. Tacis is clearly a most valuable programme. It would be ironic indeed if it were to suffer from the very bureaucracy, lack of transparency and sheer inefficiency which were prime causes of the collapse of the social and economic structure of the former Soviet Union.

In the present rather fragile state of European relations with the Russians, it is important to retain their confidence. I think the report should be required reading for all diplomats intending to serve in the area, and perhaps for all new EU commissioners.

8.14 p.m.

Lord Berkeley

My Lords, I congratulate the noble Baroness, Lady Hilton of Eggardon, and Sub-Committee C on this report. I am not a member of that sub-committee although I am a member of the Select Committee on the European Communities, My interest in NIS countries and eastern Europe stems from my interest in rail freight travelling, east and west. I lived in eastern Europe for a time.

This is an excellent report. The cover is fantastic. All the statistics on the inside back page are useful for someone who has not heard the evidence. They give a snapshot of the challenges facing those countries and members of the EU which seek to assist them.

Like my noble friend Lady Hilton I was concerned at the attitude of triumphalism and of patronising western consultants preaching. I was also struck by a sense of a lack of management. I am worried by this lack of empathy with local conditions and a professional approach as seen through western eyes which does not recognise the strong professional background of many people in the countries concerned, especially as regards engineering and the environment. I suppose I would say that as an engineer, but engineers are greatly respected outside this country. The attitude of the consultants smacks to me of old as well as new colonialism. We should condemn that in the strongest possible terms. However, I welcome the policy of technical assistance through partnership and I hope that this report will help to achieve that.

I wish to say a few words about transport, as the transport and telecommunications infrastructure is one of the six priority areas of the report. As we know in this country, transport and the environment are inextricably linked. The NIS countries, as in eastern Europe, have relied on railways for trade and travel for many decades. There was not much travel in times past, but freight was, and is, the big key to increasing industrial production in accordance with former national plans. It should have been the key to distribution although it did not always work very well. I believe that in the near future people in these countries will expect to own their own cars, and possibly trucks. Who are we to condemn people who want to own their own cars? In the future, they will probably be able to buy a car for an amount less than three years' net salary. When I lived in Romania the price was equivalent to three years' salary before tax. No government can deny people the use of their own cars or the ability to purchase them. However, problems will arise in relation to the state of the roads.

The story of railways and freight in these countries has a horribly familiar ring to it. I regret to say that this story applies to western Europe as well as to central and eastern Europe and NIS countries. Often railways fail to adapt to competition and the market economy. We hear stories all the time of unchanged working practices, countries being slow to introduce new technology, and lack of investment. As a market economy develops, rail freight becomes more complex, more expensive and probably more unreliable. It is the sad truth that railways in many parts of the world have tended to ignore the needs of their customers. However, with the introduction of the market economy in these countries, anyone will be able to buy a lorry and offer a door-to-door freight service with better reliability, and one that is probably cheaper than the railways. That is private enterprise. Whether that is private enterprise at its best or worst is debatable. The problem with that, however, is that the roads will not be able to support the volume of traffic.

We need to inquire whether the special consultants and advisers under the Tacis programme will advise the governments concerned to invest in massive road building. Will they advise them to close the railways because they can no longer compete as they are failing to reduce costs? People in these countries may still believe that the state will direct freight on to rail, but that will not be the case. Massive subsidies are paid to the railways in those countries, but the railways will carry less and less traffic. Governments will be short of money and will cut subsidies. Lines will then be closed and land will be sold off. That is what British Rail has done since the war and it is what some of the European Union railways have started to do now. It is a course that some of the central and eastern European countries are considering.

I hope that part of the Tacis programme will be to advise countries which have not yet started the process to think very carefully before they do start. I do not know whether in a market economy a subsidised railway, unchanged since the days of a planned economy, will ever compete with deregulated lorries, but the advice has to be given. We must say to them, "Do not follow what we have done regardless of local conditions".

A Member of your Lordships' House, a very eminent former Minister in the previous government, is, I believe, participating in offering advice around the world on how to privatise the railways—as we did such a great job in this country! I would question whether that would be good advice to give to NIS countries, regardless of who the owner should be. The best advice would be, "Let us have level playing fields. If you are building roads, make people pay for using them"—as we may do here—and, "If you are building railways, make people do that as well". Let us have some proper advice based on our best practice in this country.

The Commission is at present trying to introduce changes to the working time directive. It has advised—I fear, although I hope I am wrong, that the Government will go along with this—that the railways should be included but owner/drivers of lorries should be excluded because it is too difficult. If that is the case, we shall find that in two years' time every lorry driver will be an owner/driver and he will then be able to load his lorry for six hours and drive for eight hours. He will still be within the limit, but he will have been working for 14 hours; and he might be tired and not quite so good. That is what the Commission is proposing—I do not know why; we can debate it—but let us not pass that advice on to the NIS countries.

We should possibly look at some of the advice. Do we separate infrastructure on the railways? The Commission is advising and requiring everyone to do so. If it is to be subsidised, I say, "Let us keep the road and rail subsidies the same". Should NIS countries introduce competition? We have competition in Britain but not in the rest of the European Union. So what is the advice from the European Union to NIS members? Is the advice to close lines and to sell off land? As I have said, we regret it here. Mothball it perhaps, but let us have some modernisation. Let us modernise those railways, Just as we are going to modernise our railways. Let us advise them to do both, with the same investment and choosing technology that is appropriate to their stage of development. There is no point in closing all the signal boxes in Russia and saying that the system should be run from Moscow because that would save so many jobs. That is not the objective. Whether it is the objective in this country is debatable; it certainly is not sensible in NIS countries.

Let us allow the rail operating companies to perform the drastic human surgery required to reduce staff numbers and become competitive. That has not yet happened in continental Europe. It will be long and it will be painful. We have not yet finished in this country; nor has the European Union. In a market economy, those countries cannot continue to have the railways as part of the social security arm of the state. It does not work. French train drivers retire at 50 on full pay—that is great—but lorry drivers do not. There are many other situations like that. How many productive hours are worked in a day? The advice has to be appropriate.

I believe that the programme has an enormous potential to lead and advise NIS countries of the direction that they might follow, but I have serious concern about who is giving the advice, the basis of the advice and whether the advisers are saying, "We have done it at home this way, that way or the other way". We in the EU are not in a very good position to give advice on transport matters. Commissioner Kinnock told the EU railways a year ago, "Change quickly and you will have a great future. Stay as you are, and you will not survive long". If that advice is applicable to parts of the EU, how much more appropriate it is to NIS members. But we cannot say that we are doing it right.

The report will be of enormous assistance to those who want to help NIS countries from within and without. I love the partnership approach and I hope that the report will be read with great interest and be adhered to by those in the Commission and the member state governments who are charged with developing and implementing the programme.

8.24 p.m.

Lord Cromwell

My Lords, I should like to start by welcoming this very interesting and wide-ranging report. I have worked on and off with Tacis for the past six years and I certainly recognise many of the committee's findings in my own experience. I am also currently involved as a small contractor on several Tacis projects and I therefore declare a substantial practical interest.

I should like to make four points. My first concerns local—by which I mean NIS—non-government organisations. The DfID submission to the committee was correct in saying that local organisations are generally weak and have poor project preparation skills. I would add that they are also mainly run on a voluntary basis, seldom have any funds to speak of and are only very dimly aware of opportunities for donor funding. This is mainly a reflection of the short time-scale over which they have developed and is not evidence of any lack of ideas or lack of enthusiasm.

For such organisations, accessing donor funding is a daunting exercise. They are unfamiliar with the funding process, which, with its cycles, jargon and diversity of formats, has a culture of its own. A lack of proposal writing and lobbying skills is, since donors still in practice tend to work in western languages, compounded by a lack of language skills. If the local NGO sector is to benefit from donor involvement—and this point goes well beyond Tacis—then donors need to support the development of local NGOs' capacity to formulate and present well structured and practical project proposals. In order to achieve this, Tacis mechanisms and working practices need to change.

Effective involvement of NGOs requires specific programmes designed and managed in ways which improve the ability of NGOs to connect successfully with donors while at the same time building the donor's ability to work with NGOs. NGOs must not be excluded from engaging with Tacis by the cost, complication and slowness of application procedures. But, equally, they must not be swamped with money and over-ambitious programmes by over-eager donors—a recipe which has destroyed many initially successful NGOs the world over.

My second point concerns the role of external NGOs and smaller companies. I note the committee's interest in greater involvement of western NGOs and smaller organisations in Tacis programmes. There are Tacis facilities for NGO funding, but I should like to draw your Lordships' attention to the practical demands of pursuing such funding. Grant funding or co-funding can take a year or more to obtain and involve on-going lobbying efforts as well as requiring the applicant to keep prices, staff and so forth on hold for long periods. It also requires project partners' enthusiasm and faith in the funding process to be sustained, often for month after month.

Bidding for the larger projects which are put out to competitive tender requires a considerable effort even for large organisations and is estimated to cost between £5,000 and £10,000 a time. Even the winning organisation cannot recover these costs, and unsuccessful bidders, especially if they are relatively small organisations, tend to feel that the cost and effort involved is not worth the risk, and they give up.

In a commercial tendering environment that might be acceptable. A relatively small circle of the wealthiest companies, which might at least claim to be the best resourced to carry out the tasks involved, will be left in the ring. However, awarding finance on the basis of "To those that have shall be given" will not lead to the development of an active and diverse NGO landscape. As with local organisations, so working with external NGOs requires a different approach from dealing with commercial consulting companies.

Evidence given to the committee suggested that western NGOs could join consortia led by larger consulting companies in bidding for projects. That does happen; but I would ask your Lordships' to consider that tagging along behind a large consulting company, whose raison d'être may be very different from the NGOs', is a poor substitute for developing and implementing projects with an NGO focus and an NGO ethos.

I should not, however, wish to suggest unremitting criticism or doom and gloom; and that brings me to my third point. Tacis includes some excellent programmes. Stories of bureaucracy and delay in Tacis are not hard to find, but it is naïve to compare Tacis too unfavourably with, for example, bilateral programmes. Tacis certainly has no monopoly on delay and bureaucracy.

The Tacis "Bistro" programme is a very positive example of a relatively simple, swift and accessible funding line available within the CIS countries. Its success derives from being largely in the remit of the in-country EC delegations, where local staff and resident external staff can assist and advise in project development. I note from the report, however, that it remains consistently underspent. Perhaps some of the reasons for that are in my two previous points about lack of NGO access. The programme's only other practical shortcoming lies in the application of inflexible financing rules from Brussels, a subject to which, with your Lordships' indulgence, I shall return shortly.

My final point concerns the use and development of CIS nationals. The committee's report emphasises the wealth of talent within the CIS. The report also warns, however, against assuming that highly intellectual and cultured societies—such as are widely found in CIS countries—are "at one" with western attitudes and aspirations. I am sure that the report is correct on both those points.

Development of local expertise should be a central aspect and justification of any western involvement. Developing that expertise requires not merely training but also opportunities to put training into practice. As regards the NGO sector, that means real avenues of financing for NGO activities. In the case of working with and bringing on individual CIS specialists, a realistic approach is needed to meeting the costs of engaging them. Perhaps I may provide a brief illustration of that point.

A common problem with Tacis programmes is that Brussels insists on unrealistic and substantial differentials between living allowances granted to local and external specialists. That outdated approach leads to situations in which project team members are unable to take meals together or even to stay in the same hotel, due to the financial gulf between them. That does very little to develop good working relationships or respect, or to support the transfer of know-how between team members. I sincerely apologise for taking up the House's time with such a prosaic illustrative detail. However, it is exactly that kind of anomaly which hinders the proper participation of local specialists in projects intended to develop their countries. Tacis needs to address such anomalies if it is serious about increasing the roles, availability and impact of local specialists.

In conclusion, I feel that Tacis does much successful work and, while it is not yet as effective as it should be in the areas that I have attempted to describe, we should learn from Tacis' successes as well as its shortcomings. Where problems are overcome, it is often due to the local knowledge, initiative and goodwill of in-country EC delegation staff—a model which could be used far more widely.

It is easy to engage in "Brussels bashing" and I am glad that the report sought a balance between identifying areas of frustration and reflecting on the difficult path which Tacis has to tread between financial accountability and flexible responsiveness to emerging needs. I congratulate the committee on a very interesting and illuminating report, which I look forward to discussing with my friends both in Tacis and in the CIS.

8.33 p.m.

Baroness Wilcox

My Lords, we have heard a superb speech by the noble Baroness, Lady Hilton of Eggardon, the chairman of the committee on which I was privileged to serve. This was, as she described, an opportunity to influence a far-reaching report being formulated by the European Commission on the future of Tacis. We have read in our committee's report vividly and beautifully written descriptions by our Clerk, Tom Radice, of the quality of the environment of the former Soviet Union and its immense significance to the rest of the world.

Concern for the environment is not only central to the development of democracy and civil society and to protection of the consumer; it is also vital to successful economic transformation. The transition from command to market economies in the NIS is a painful process. There are immediate needs to be met: jobs; money; food. Hazardous fumes from the local factory do not yet lead local residents to demand its closure as they want the factory to stay there because they need to work in it. So there is a long-term challenge. But a new generation cometh, with new expectations. On our fact-finding visit we met many young people, mainly women, who were already taking up opportunities and creating an environment of which their parents, just a few years ago, could hardly have dreamed.

Our evidence gathering and our visit to Kiev in the Ukraine, Moscow and St. Petersburg showed us that the European Union's Tacis programme, with all the faults that have been outlined by the noble Lord, Lord Cromwell, has plainly been beneficial—in particular in helping to build trust and mutual respect between western Europe and the newly independent states.

However, even eight years after the command economy came to an end, it is still not a simple task for people to break free from their institutional and social straitjacket. The technically qualified managerial class has yet to come to terms with taking responsibility as opposed to following orders. Tacis must have as its priority the management of change in that area—but with pre-visit briefings on the culture and the language for outside experts to arrive with, in order to avoid, as we heard described to us, putting everyone's back up on day one with European and, worse, American "business school management-speak".

Tacis has done a great deal to stimulate environmental awareness and the capacity of people to be involved in a host of social and environmental issues at grass roots level. Although our committee warmly welcomes the general tone of the Government's response to the report, there is one area where I would ask the Government to be clearer in their support of the "people-to-people" policy. They seem to be proposing to support a greater emphasis on larger programmes in their response to the ECC report. I question, as did the noble Baroness, Lady Hilton, and my noble friend Lady Park, whether an increased number of large-scale, high profile initiatives accompanied by a limited number of small-scale initiatives is the right way forward. The visits and the evidence in our report lead me to press in favour of smaller projects and their growing importance and the vital role of the non-governmental organisations and the consumer groups with which I am involved.

Initiatives such as "city twinning" have already been referred to. I refer also to the locally named "Bistro" projects. It was only when I was in Russia that I learnt that "bistro" was a Russian word. The Russian émigrés who had rushed over to Paris and had to find something to do opened up quick food restaurants. That is where the word comes from. It is marvellous that they own that word; it is their own. Naturally the projects are hugely successful. They are local initiatives; they come together quickly; they can be run by local people and transferred easily, town to town, street to street, village to village. It is ownership of the best kind. The local European Union delegation has much more discretion in relation to these small projects than it does in relation to larger projects to hand out the money and approve them.

In one area, people came together to run a local market. The project was described to us: how to manage a local market; how to get the traders together with their stalls; wholesaling; distribution; the routes to market; the transportation; then the shared profit; the retained profit; the reinvestment; and even more, the planning for the future.

I cannot stress strongly enough the enthusiasm of people at a local level to learn how to take ownership of their lives. I suspect that local consumer groups, already now learning how to manage and campaign through the media and the press and how to lobby their parliament for the health of their families, will promote democracy faster through their groundswell than ever will the vast programmes we have heard about, where limited groups of contractors can go in and take the contracts. We heard awful stories: as soon as they have got the contract they send in their least experienced people because their most experienced people do not want to work out of their host country for these long periods of time. That leads to local corruption.

It does not seem to me that that is the place to start. The future of this vast area of our globe, 15 per cent of the land mass, is in its people's courage and confidence to embrace a new and unknown future. The closer the Tacis programmes can get to those people, the more chance there is of successful democratisation of a new kind which will take responsibility for its own environmental programmes by Russia, by those newly independent states. It will look, therefore, to our safeguard, to our future and to the safety of all of us. I commend the report to the House.

8.40 p.m.

Lord Walpole

My Lords, as a member of the committee speaking so late, I believe that most points have been made. Once again I thank our chairman of the inquiry for the wonderful way in which she so gently and firmly guided us all. I especially thank Tom Radice for organising us and Andrew Convey, our specialist adviser. We made a wonderful team and, together with the noble Baroness, Lady Wilcox, and myself, we were the group who went to Russia.

There are two aspects of my experience of going to Russia and meeting people that I wish to share with your Lordships tonight. They are the concept of person-to-person contact, on which many have touched, and, arising from that, the problems of Russian NGOs and their status. I particularly welcomed the speech of my noble friend Lord Cromwell, because it was unsolicited. It was wonderful. If he had been on the committee he could have made it and got away with it, it was such a good speech. From someone not even on the committee, it was delightful, confirming everything that I am afraid we discovered.

We chose the title of the report carefully. It suggests that help to the former Soviet Union is a partnership and that both sides have a great deal to contribute. Talking person to person is one of the best ways of resolving problems. It might not be inappropriate to suggest at this moment that our Prime Minister's dash to America last night for a little person-to-person chat with President Clinton and Viktor Chernomyrdin's visit to President Milosevic today may do a lot more than any other forms of communication between leaders in the present Kosovo crisis. It is an example of person-to-person contact which we hope will resolve matters.

Under the Tacis range of agreements, it is very important to have various forms of discussion. Twinning of NGOs and local authorities and exchanges between universities could lead to a greater understanding between the EU and the former Soviet Union. It is also vitally important to understand the Russian character and Russian aspirations, not the least of which is to appreciate that they have much to offer us. That is one of the reasons we decided that the main points of our report would also be produced in Russian. I have a copy in front of me, I cannot read it and I cannot prove that it is correct. However, publishing one of our reports in Russian is another first for this House. It is an innovation of which the committee is proud.

I am, therefore, slightly concerned about the Government's response. The proposed regulation does not appear to be reinforcing the person-to-person policy. By placing greater emphasis on the larger projects, there are bound to be many people and organisations talking to each other rather than persons. I do not quite understand what the Government mean by, There are fewer opportunities for the UK public sector than other members of the EU". In paragraph 64 of our report we mention but four extremely close exchanges with co-operation between, for example, Moldova and the Hampshire County Council. It is interesting that someone in Hampshire, attempting to try to work out the traffic problems of Basingstoke, was approached by Moldova which is frightened that more cars may cause problems. What a lovely clean sheet to start with! Hampshire people must have been very envious.

In the Government's response to our Recommendation 6—again, on the small versus the large-scale initiatives—we are very much in favour of the small-scale projects which involve local NGOs and give rise, at very little cost, to such actions as environment awareness days and setting up the libraries with environmental information in book, video and CD-ROM form. Those projects are essentially aimed at children and are the kind of thing I have been attempting to do in England in the past 10 years. We hope that in Russia in the long run it will produce a new generation of environmentally aware adults.

However, there are other forms of aid to the former Soviet Union. We have already heard that such organisations there are not well co-ordinated. You just happen to hear that someone is giving something to someone. There are many instances of money coming in from the Baltic states. It is important that the whole of the Baltic states' environment is kept roughly under control, Russia being the problem. There is money coming in from the US—we have heard that it comes in in a conquering way—and from Germany, which I am sure is genuinely keen to help. It also comes from our own Know-How Fund. I ask the Minister this tonight: if the EU is to take on bigger projects, could our Government look to the small projects, as they have in the past with our Know-How Fund? That is one of the ways in which we can make progress.

The point I wish to make about the Russian NGOs is one which we can do nothing about, I am afraid. It is just that they operate under a totally different system from NGOs as we know them. They are at least beginning to be recognised by the authorities in Russia; they are not just looked on as being rather subversive and difficult organisations. We may make remarks about Friends of the Earth on occasions, but we accept that our NGOs in Europe are helpful. I want the Russians to get it right.

However, the problem is that they cannot operate under the type of charity laws that we have in this country. In particular, they have to pay tax on any money they raise. That makes their financial viability less easy. I hope that over a period of time this will improve and that Russia and the other members of the former Soviet Union will introduce charity laws under which NGOs can work and tax systems which will be helpful to them.

Finally, the report is one of the most interesting and stimulating that the sub-committee has produced. If the Soviet Union is to recover from the appalling environmental state it has got into, co-operation, partnership and trust are the name of the game.

8.50 p.m.

Lord Ponsonby of Shulbrede

My Lords, I, too, would like to congratulate my noble friend on her chairmanship of the sub-committee. I should also particularly like to congratulate her on the colour map, which was a great addition to the report. My views can be summed up by a particular quote. I very much appreciated the inclusion of various quotes throughout the text because it brought the report alive. It was so much easier to concentrate, if that is the right word, although it was an easy report to read anyway. Perhaps I may read just a little of the quote which summed up my view. It is from Mr. Guy de Selliers, who is chairman of Flemings Eastern Europe. He said, Our basic recommendation is to reorientate the objectives of the Tacis Programme from the broad objectives of the past—support for democracy and market economy—to a more pragmatic objective of promoting concrete activities which can lead to mutually beneficial co-operation between NIS institutions and their counterparts in the EU". That really sums up my view about the reorientation of the Tacis project.

The noble Lord, Lord Cromwell, gave an extremely good speech. I congratulate him on his tenacity in managing a number of projects with Tacis funding. In my previous job I applied for both World Bank funding and Tacis funding. I gave up on both counts. I found that it was diverting too much attention from what I was trying to do in running the company with which I was involved. I congratulate the noble Lord on his tenacity.

I wish to concentrate on two areas arising from that quotation; namely, the administration of the Tacis programme and its integration with other international bodies. The word "monitoring" translates as "control" in Russian. Russians know about control only too well. They are extremely suspicious of it. I believe that accounts for the reluctance of many of the Russians who are part of the Tacis programme about whom I have read and to whom I have spoken directly. They are somewhat resentful of the monitoring or control of their programmes. The whole essence of this report is the balance between proper accountability for EU funds and allowing some freedom of action for people to use their initiative and to develop their skills in managing money in creative ways.

The word "consultant" has become something of a dirty word, in this report as well as in Russia. I have been a consultant in my time. I have certainly employed many consultants. When we applied for the funding which I mentioned at the beginning of my speech we aspired to being consultants at that stage. In my experience it is very difficult when employing people on vastly different wage levels. I was earning 50 times more than the Russian engineers with whom I was working. We were not quite as insensitive as to make my Russian colleagues and I use different flights and eat in different messes. We were all treated completely the same as regards working conditions. There was a massive differential in the amount we received for doing pretty much the same job.

It is somewhat simplistic and naive to say that the differential needs to be reduced, which it does. The reality is that the purpose of the Tacis programme is to change working and management practices in Russia. Having worked for nearly four years in a joint oil venture in Siberia, it is impossible to exaggerate the debilitating effects of a huge Russian bureaucracy and very entrenched Russian management practices. Even though I was employed as an engineer, my job was to try to change the way they ran their businesses. That is the purpose of the Tacis programme. Western consultants have something to offer. In fact, I go further and say that quite a few Western consultants nowadays have a great deal of experience of Russia and the former Soviet Union.

When we were managing the joint venture our experience was that the best way forward was to engage young Russians who were extremely capable. We gave them a lot of responsibility early in their working life. While the conditions were fairly harsh in that it was minus 40 degrees centigrade, they could earn a great deal of money over a few years and then go on to even more responsible jobs. In that manner we found our way around the problem of working effectively with Russians. Our answer was to use young people.

The phrase "people to people" has been used a number of times. It is absolutely right. The key to success concerns the personalities involved, commitment and your colleagues believing that you are there for the long haul, come hell or high water. In my view there is nothing else which really motivates people.

The second subject I wish to mention is the integration of the Tacis programme with other programmes and international and financial institutions. I am thinking of the EBRD, the World Bank, IFC and the multitude of bilateral aid programmes. I include the European Investment Bank, which does not invest in Russia. Perhaps it should think about that in the future.

There needs to be some idea of where the funding is coming from once the reports have been produced by Tacis. It causes tremendous resentment among the Russians that these bright ideas are dreamt up and the consultants then swan off back to their countries in the West, but the money is not there for implementing the ideas.

The reality of the Russian economy is, as I understand it, that about 60 per cent is a grey economy. I have heard the figure of 30 billion US dollars held in cash in Russia. It is quite wrong to equate that with massive corruption. It represents the total breakdown of the Russians' faith in their own banking system and institutions. There is a vibrant economy there, but it is totally undirected. There needs to he an institutional look at how to gain access to these funds and to channel them more constructively for the restructuring of Russia.

In conclusion, I wish to state the obvious; namely, that this involves a long haul. The Tacis programme has already invested in Russia over one billion ecus, which is about 1 billion dollars. It is a large-scale investment on a scale similar to that of the Marshall Plan, to which it was quite rightly compared. But I do not believe that it is constructive to engage in Brussels bashing, as the noble Lord, Lord Cromwell, said. We have to talk up success and change the Tacis programme. I was very privileged to take part in the preparation of this report. I am sure that it will go some way towards reorienting the long-term success of the Tacis programme.

8.58 p.m.

Baroness Williams of Crosby

My Lords, it has been a very great pleasure to read this report. It is one of the best presented, most sensible and wisest reports that I have seen from any of the sub-committees of the Select Committee on the European Communities on which I had the privilege to serve for a period of time. I congratulate all those members of the sub-committee and not least the noble Baroness, Lady Hilton of Eggardon, on what I believe is a remarkable achievement.

Having said that, I have to declare a rather bizarre interest. I am the president of an organisation called Project Liberty, now renamed Project Parity, which, since 1990, has worked very closely in central and Eastern Europe and more recently in Russia and the Ukraine encouraging, among other things, women to enter public life and to encouraging civil servants to understand the need to be responsible and responsive to their citizens. I am also a member of the board of one of the very few management institutes which is Ukranian-led, based in Kiev. It is the International Management Institute of Kiev. In case there are any Eurosceptics here I should say quickly that I am not paid in any capacity apart from a modest stipend when I spend a week at a seminar. This has always appeared to be rather surprising to Tacis, as are the extremely modest sums that we pay to those who lecture in these seminars which are deliberately kept to a minimum. I add that none of them is a consultant. I apologise to the noble Lord, Lord Ponsonby of Shulbrede, who is as nice a consultant as anyone can hope to meet.

I turn briefly to the report. I begin by echoing the words of the noble Baroness, Lady Hilton, about the scale of the environmental disaster that still confronts Russia but also Ukraine and now to a lesser extent—thank God—central and eastern Europe. She mentioned her own experiences. I should like to give two other examples. First, whenever I go to Ukraine I am still warned that I must not go anywhere near the Pripet Marshes. Many noble Lords are aware that there are literally thousands of hectares of arable land still hopelessly poisoned and will not be able either to yield food or feed animals for many decades to come. It is a huge hole in the middle of the Belarus Ukraine and is a very rich area of arable land that has simply been written off for many generations to come by the Chernobyl accident. Many noble Lords will be aware that the second, third and fourth Chernobyl stations still show signs of being very dangerous and from time to time lead to alarms. They still have not been adequately modified to enable us to feel completely safe about their continuing use. That is not the only nuclear power station of which that is true.

The second example is the recent visit that I paid to Kharhiv in the Donbass in the east of Ukraine where all too often it is impossible to see out of the window because of the sheer volume of carbon dioxide in the air. That is a coal mining area where the abilities of the regional council are non-existent. It has no money, no resources and virtually no ability to deal with a disastrous environmental problem that is already profoundly affecting their children. It results in the very worst forms of lung disease, asthma and many other related complaints.

I very much commend the comments of the noble Baroness, Lady Hilton, about management styles. She is absolutely right that we can learn a great deal from Russia and the NIS countries, but the management style certainly stands in the way. One reason for it was the overwhelming priority given to economic growth in virtually all circumstances under the communist regimes in those countries where effectively growth was not qualified by any sense of the input or quality of product but the sheer need to show that one was meeting production norms. That meant that an institutionalised attitude grew up to the misuse and abuse of resources.

I believe that the United Kingdom and the EU can play an immense part in bringing to bear our expertise in the field of energy conservation and the control and use of electronic devices to minimise energy use. Even today the NIS countries and Russia are literally flinging away their finite resources in huge proportions because of their lack of adequate energy conservation measures.

I agree with the comments of the noble Lord, Lord Berkeley. In a very inappropriate way I almost began to applaud what he said. When he referred to some of the purposes for which western consultants had been used I could not have agreed with him more. I provide only one example to complement what he said so interestingly about public transport and the railways. I have noticed that they run rather well in Russia; they are very effective and usually run on time.

I should like to add to his comments the totally ludicrous financing of consultants in the field of health privatisation. Those consultants went out to speak to countries which until recently had been characterised by a rather astonishing level of public health provision despite their relatively low per capita incomes. They certainly did not need to be told by us how to ensure that 50 per cent of their population would never have access to health again. We have been rather successful in getting that message across in central and eastern Europe. I pray that we totally fail to get it across in Russia and Ukraine especially given the conversion that Conservative colleagues have undergone in fully supporting the idea of a national health service.

I turn next to the issues raised in the report. I go through them quickly to save the time of the House. I could not agree more with what the report had to say about partnership. In our own Project Parity organisation we have always worked directly and closely with NGOs from local areas. We will not put on seminars unless we have the full support and involvement at every single planning stage of local NGOs, including the provision of lecturers and chair persons. In that way people feel that they own these seminars and we do not come with any sense of superiority or pride.

Partnership is indeed the name of the game. I completely agree with the noble Baroness, Lady Wilcox, about the Bistro programme and the twinning of towns and local authorities with their counterparts in NIS countries and Russia. As the noble Lord, Lord Walpole, pointed out, this is one of the most effective ways in which we can help these countries. It brings about the people-to-people relationships that are so utterly crucial and the humility and learning that takes place on both sides of it.

I am a little frightened by the regulation. I very much agree with the criticism made by the noble Lord, Lord Cromwell, and others, about the emphasis placed on a very small number of subjects as a result of the reforms that are being made. I fear that it is perhaps the wrong—and bureaucratic—way to go.

I also add my great approval of the comments about respect for the skills and talents of the NIS communities, particularly in fields like engineering and the arts. These countries have a huge amount to contribute to us. At a time when they are going through a crisis of confidence it is vital that we recognise the huge achievements of Russia, Ukraine and other NIS civilisations not least in respect of the quality of their education. I am not even sure that we cannot in this country learn something about the quality of the science and technology education that has long been achieved in Russia and, for that matter, in much of central Europe. If one compares the results of their mathematics competitions with the rather pathetic results of British and, for that matter, American competitions in the same field one feels a proper sense of humility.

I wish also to underline what was said in the report about the need for the financial institutions, too, to learn these lessons. On a number of occasions they have done a rather bad job. I think in particular of the International Monetary Fund's handling of the last Russian crisis. It is important that they learn the lessons in the report and elsewhere.

We are beginning to see some light dawning. For the first time, on Monday, the European Bank for Reconstruction and Development, which now has responsibility for investment in Russia, held a seminar at which environmental NGOs were not only present but also on the panel. That is the first seminar the EBRD has conducted, and the first at which an environmental NGO has been invited to come to give its opinion. Mr James Barnes of Friends of the Earth International was present and able to comment on some of the work of the IFI.

I echo what the noble Lords, Lord Cromwell and Lord Ponsonby, said about the complexity of procedures. Those of us involved know that in many cases the best thing one can do if one wants to obtain a Tacis grant of some size is to employ a Brussels law office whose members have never been anyway near Russia or Ukraine. That cannot be right. Procedures which are so complex that one has to employ a lawyer in order to have the documents drawn up must be badly wrong. I know that the same is true of American foundations, but surely we could simplify the requirements laid down for contracts to be extended. We should also beef up the evaluation systems for projects once completed.

This is such a good report that I should like the committee to ask how best it might be disseminated. As the noble Lord, Lord Walpole, said, it is marvellous that it has been translated into Russian. That is a great achievement by the committee. I should like a copy of this report sent to every member of the environmental committee of the European Parliament, every member of the cabinet of the commission for the environment in the European Commission, and every member of the environmental committees of both Houses of this Parliament. One of the great tragedies about the marvellous work done by the Select Committee and its sub-committees in this House is that on the whole the reports are so little known once they have been completed. This report is one of several which deserve to he far more widely read and digested than is likely otherwise to occur.

As regards the Council's conclusion about the regulation, the Council of Ministers of the European Union, which represents member governments, pronounced itself wishing to set up a committee of member states to oversee the work of Tacis. Perhaps the Council of Ministers could have been just a little more visionary by suggesting that there should be a joint committee of donors and recipients along the lines of the overwhelmingly successful Marshall Plan. I fear that the provision of yet another committee to oversee with no input from the recipients is all too clear an example of what this committee has indicated: the superior attitude of Western powers towards those at the receiving end of the projects under Tacis. I strongly recommend that there should be at least occasional meetings of donors and recipients. Together they can make this a better programme, and one from which many more can benefit.

9.12 p.m.

Baroness Rawlings

My Lords, I shall be brief at this late stage as I believe we should all like to hear the response of the noble Baroness, Lady Amos. I, too, add my congratulations to the noble Baroness, Lady Hilton of Eggardon, and her committee on a superb and comprehensive report which I have read with great interest and enjoyment. I agree with everything that the noble Baroness, Lady Williams of Crosby, said about it. I was especially interested as the former USSR was an area that I studied for many years.

This has been a most informative debate to which I listened carefully. The political events following the fall of the Berlin Wall brought enormous changes to the map of Europe. Within the area covered by this report, the former Soviet Union changed from one centralised state into a much larger number of autonomous states, based on the former states of the Soviet Union.

The new independent states faced and still face immense environmental problems. While partly derived from geography, those are largely the legacy of the Soviet period, as pointed out so clearly by the noble Baroness, Lady Williams of Crosby. Priorities must be the reduction of health risks, especially the provision of safe drinking water and tackling the worst problems of industrial pollution and hazardous waste. I remember speaking on the PHARE report when I mentioned the environmental horrors in Bulgaria which I had witnessed and which were much the same as we have heard today.

The Tacis programme was first conceived as far back as December 1990. The Council then decided that the European Union should support the then Soviet Union in two ways: by providing the know how; and by supplying humanitarian aid, with a budget of £280 million. Since its creation in 1991, it has evolved pretty rapidly over what is a relatively short period. In November 1996, a regulation marked a raising, of the profile of the environment in the Tacis range of programmes. That is of immense importance, as we have heard from several noble Lords this evening.

It has always been said when talking about the European Union that "the environment knows no frontiers". I think this is right. As with the PHARE programme, the inquiry revealed a considerable number of complexities.

We on these Benches support the Tacis initiative, especially in the context of the environment. Many of the countries in the region are sadly unable to give adequate importance to their environmental problems as they fundamentally lack the resources.

The role of the non-governmental organisations and the LIEN programme, to which the noble Lords, Lord Cromwell and Lord Walpole, referred, is crucial. These are by their nature less cumbersome and probably less doctrinaire. They have a crucial place in the establishment of the institutions. Here, Tacis can play a key role, first in reassuring the governments of the countries that they have nothing to fear from the NGOs. They are often regarded with a great deal of suspicion, not unnaturally. The NGO was virtually an unknown phenomenon during the communist era. It is important that the NGOs are assisted by Tacis officials to help them to find their way about governments. I would support more use of local talent when possible—a thread that has run through all the speeches this evening.

I return to the central point, the environment. The challenge is huge. Perhaps it is the most visible of the dismal legacies of the communist era. The Tacis democracy programme which was launched by the European Commission in 1992 to help promote to democratic Russia is of vital importance I echo the sentiments of my noble friend Lady Wilcox on the size of the programmes. It must be right to keep them closer to the people. "People-to-people projects" sounds a very good name to me.

The noble Lord, Lord Ponsonby, from his personal experiences, explained all too clearly the need for greater transparency and easier accessibility especially to applicants. This comes up with practically any project that comes from Brussels. It was mentioned by several noble Lords and needs attention. I have touched on just a fraction of this very comprehensive report.

Finally, we support this first-class report. The whole world wants to see Russia as well as the former Soviet republics stable, democratic and prosperous. It is not only essential for their people, but for the world too. We want this not from altruism; not even because we want to be able to trade goods and services with them in ever-increasing amounts; we want it because if there is no democracy and prosperity over this huge area of the world, the resulting lack of stability could pose great and continuing dangers for us all, as we are currently seeing only too vividly and tragically in former communist lands much closer to us.

The current Tacis regulation expires at the end of this year, as mentioned by the noble Baroness, Lady Hilton of Eggardon, and a draft regulation for the period 2000–06 is now under consideration. According to the Secretary of State, the draft is broadly acceptable, but contains a number of new initiatives on which we are seeking clarification.

As I said, we on these Benches fully support the Tacis programme, despite some shortcomings which were clearly brought out in this excellent and comprehensive report.

But, Russia has her responsibilities too, towards both her neighbours and towards the industrial world that is working so hard and giving so generously to help her drag herself out of her miserable past. One of her responsibilities is her co-operation with the NATO allies during this very difficult and tense time in the present war with the former Republic of Yugoslavia and President Milosevic. News of the Russian Government aiding and abetting President Milosevic, putting serious pressure on former satellites, like Bulgaria, and trying to force them not to co-operate with NATO, is hardly the best way to encourage the European Union to extend the Tacis programme. Russia needs Tacis. It is an important programme, but not at any price.

9.20 p.m.

Baroness Amos

My Lords, I join other noble Lords in thanking my noble friend Lady Hilton of Eggardon, the chairman of the committee, for introducing tonight's important debate. I also thank other noble Lords who have contributed.

The Government have welcomed the very comprehensive report by the Select Committee on the European Communities on the Tacis programme, and in particular its fundamental conclusion that it will be essential to maintain and strengthen the position of environment as a priority area for Tacis.

The report is primarily about Tacis's response to the environmental challenge facing the region. But it also goes further and looks at the means employed by Tacis in implementing its programmes: its use of consultants; its procedures; its management structure; and internal resources. Those points were taken up by many noble Lords tonight. A good deal of attention is given to the bureaucratic systems which affect all Tacis activities. The report also considers ways of improving quality and transparency throughout the programmes, a point made by my noble friend Lady Hilton. Many of the report's conclusions match our own views about the ways Tacis might tackle its perceived shortcomings, as well as contributing towards a more coherent approach to environmental programmes.

There is no doubt that the states of the former Soviet Union face an immense environmental challenge. We have heard examples of the problems facing the region during the debate this evening. The legacy of unsustainable development under Soviet planning has left a huge burden of environmental degradation. This is reflected in the widening gap between health standards and life expectancy in western and former Soviet countries. It is also seen in the huge wastage of energy—a point raised by the noble Baroness, Lady Williams—water and other natural resources because of distorted pricing and poor environmental management.

Although economic decline in recent years has brought about a reduction in air and water pollution, there are still large volumes of municipal and industrial waste. Reforms and investments are now needed to ensure that economic recovery will take place in an environmentally sustainable way and that the great natural resources of the region are not destroyed.

My noble friend Lady Hilton referred to the importance of economic growth, but not, as she said, to the detriment of the environment. The DfID considers that economic reform, good government, the growth of civil society and the improvement of the environment are inseparably linked. It is no coincidence that the transition countries which have made most progress on the environment are those which have been in the forefront of economic and political reform. The slower pace of reform generally in the former USSR has been a significant brake on environmental improvement. In judging the performance of Tacis, we should keep in mind that many of the basic conditions for environmental progress are lacking in the countries in which it operates.

The scale of the problem is enormous and there is plenty of scope for all donors to play a part. The United Kingdom Government, in the 1997 White Paper, identified protection and better management of the environment as one of the aims of sustainable development, along with creating livelihoods for poor people and promoting human development. In Russia, for example, our allocated funding to the environment has increased by over 300 per cent since the White Paper, having risen from £600,000 a year to the current level of £2 million a year. This has allowed us to support a variety of new projects, including strengthening the management efficiency of the water utility in St. Petersburg; identifying and tackling the barriers to commercialising water services; and establishing a challenge fund to ensure that Russian environmental NGOs are fully involved in the transition process.

My noble friend Lord Ponsonby of Shulbrede made reference to the need for integration with other international institutions.

We take the view that Tacis should continue to retain its position as the principal technical assistance instrument within the region, but as a complementary part of a global system, which includes the international financing institutions; for example, the World Bank and the European Bank for Reconstruction and Development.

We fully support the recommendations in the report for closer co-operation with other financing institutions and we shall press for environmental issues to be given higher priority in the new regulation for Tacis now being negotiated for the period 2000–06, and for the programme to be co-ordinated as much as possible with those of other donors.

Discussions on the new regulation have indicated that other member states share our concerns that due attention should be given to the environmental and social effects of transition. We are reasonably confident that we shall succeed in focusing the new regulation to that effect.

I turn now to some of the management issues which many noble Lords raised. The Tacis programme has attracted a good deal of criticism, some of it repeated this evening. There is criticism in the report, in the press, from the European Court of Auditors and by general repute. There is no denying that Tacis has been slow to implement programmes. Its unwieldy procedures have led to delays in engaging contractors and in launching projects. In many cases, project quality has been of questionable value and consultants have been frustrated by the inability of Tacis to adapt to changing circumstances and by delays in receiving payments.

Therefore, the Government welcome in particular the practical recommendations in the report. I am pleased to tell my noble friend Lady Hilton of Eggardon that we consider the proposed database to be an excellent suggestion, although it should be noted that there is no shortage of publicly available information about Tacis programmes. Such information is available through the Tacis website and through Tacis publications, but overlap and duplication may be avoided by better co-ordination among donors. We have already been in contact with Tacis on that point.

The noble Lord, Lord Cromwell, mentioned the need to develop local capacity. The report also recommends that Tacis should become more transparent and accessible for would-be applicants and tenderers. It is obvious that emerging NGOs and other groups which we hope will shape and eventually transform civil society in the region in the future are put off by the complexity of the procedures.

The Department for International Development has a particular interest in the development of civil society organisations in transitional countries. In doing that, we also hope to build capacity. In our own bilateral programmes, we have been working with a range of new and more established organisations such as chambers of commerce, community groups, human rights organisations and lobbying groups, including those promoting environmental issues. We certainly support any moves to make Tacis more responsive to the needs of civil society stakeholders.

A number of noble Lords mentioned the need to use skills in the region, and the noble Baroness, Lady Wilcox, highlighted in particular the need for cultural sensitivity. The question of culture is fundamental and the report rightly highlights the need for awareness of local sensitivities.

We agree completely with the recommendation that donors should recognise the skills and experiences existing already in the region. We should work hard to build up trust and make greater use of NIS experts, a proposal recognised already in the draft of the new Tacis regulation.

A number of noble Lords, including the noble Lord, Lord Walpole, and the noble Baroness, Lady Rawlings, spoke about the importance of small projects, the need for support to local NGOs and people-to-people links. The Government agree that such links are crucial to building partnership and trust between NIS countries and Europe.

Tacis does not have comparative advantage in running small projects from Brussels, as many of your Lordships have rightly pointed out. The procedures are still too complex and slow. However, schemes run directly from EU delegations have been effective and much more flexible, as incidentally have many Know-How Fund schemes. That is why the Government support more devolution of responsibility for Tacis projects to EU delegations, especially working through local people.

I also want to join the noble Baroness, Lady Williams of Crosby, in commending the important work which Project Parity does with women. There are a number of ways in which Tacis could streamline its operations. The suggestions made of delegating more responsibility to in-country Tacis teams and involving field staff in project design and planning would have the effect of both speeding up project delivery and improving project quality, as would longer tours of duty to ensure better continuity of advice and project supervision.

We have always recognised that to a certain extent Tacis was constrained by the administration procedures imposed on it by the 1977 financial regulation, which governs all EC programmes, which are notoriously inflexible and bureaucratic. The Commission is planning a substantial review of the financial regulation this year. The UK is seeking to influence that process to ensure that the revised regulation allows for more effective and efficient systems, while still maintaining an appropriate degree of financial control and oversight to prevent fraud and mismanagement.

The noble Baroness, Lady Park of Monmouth, mentioned mismanagement. It is our view that the Commission could also institute substantial internal managerial reforms to improve the speed of delivery and quality of Tacis and other aid programmes within the constraints of existing procedures and staff resources.

Last month the Prime Minister set out in the other place a number of ideas on Commission management reform. The Government will work closely with Mr. Prodi and his new team to ensure that modernising Commission working practices is high on the reform agenda.

Now, more than ever, a complete overhaul of systems for approval, financial management and auditing of aid projects is needed, together with a new culture of accountability in the Commission, so that individuals are held responsible for the budgets that they manage. We also accept the need for reviews of staff resources and competences to allow more staff resources to be allocated to improving project design and monitoring.

The strengthening proposed should be carried out by developing the Commission's internal expertise to enable it to make better judgments on project quality and to find other ways of making better use of existing staffing budgets rather than simply by increasing staff numbers.

It is not premature for me to tell the House that there is a good chance that some of the recommendations included in the report will be addressed by the new regulation governing the programme which is currently under discussion in Brussels. It is a testament to the work of the committee that that is happening.

The noble Baroness, Lady Park of Monmouth, mentioned the need for a more practical and pragmatic approach. My noble friend Lord Berkeley expressed concern about the lack of empathy with local conditions. I am pleased to be able to tell the House that the proposal for the new regulation includes the increased use of local experts and more attachments, or twinnings, between western organisations and NIS partners. It also makes provision for a dialogue-driven approach to programming, a point made powerfully by the noble Lord, Lord Walpole, when he talked about the need for people-to-people policy.

The proposed new regulation also proposes that there should be a move away from the old "shopping list" approach towards one which we hope will give member states a greater role in deciding priorities as well as engaging local partners more effectively. There are also proposals to improve programme quality and content by adopting a phased approach, which would help to prevent continued funding for clearly unsuccessful projects. There are also ideas for an incentive scheme. Those proposals have yet to be worked out in detail, but they indicate a genuine desire on the part of the Commission to effect real improvements.

On the wider issues of reform of the Community's aid programmes, the Government have published an institutional strategy paper since they gave evidence to the committee last year. That document sets out 18 specific objectives which the UK is pursuing with the Commission, other EU institutions and member states to improve the effectiveness and focus of EC aid. It is available in the Library and I commend it to the House.

In the time available, I am unable to deal with the specific transport issues raised by my noble friend Lord Berkeley, but I am happy to follow them up in writing and to answer the specific points he raised.

I conclude by turning to environmental issues. The report and the debate this evening recognise that the environmental problems are huge, and that Tacis resources alone will never be enough to solve them. Good projects have been implemented in the face of great difficulties and many more are now in the pipeline. The Tacis programme is now entering a new era and we must ensure that this leads to a better and more effective programme in the future.

9.36 p.m.

Baroness Hilton of Eggardon

My Lords, I am grateful to the Minister for what was in many ways an encouraging response, particularly in relation to the negotiations that are taking place with the Commission. They sound very much in tune with our recommendations. I am also grateful to all Members of the House who took part in the debate. We were talking to ourselves to some extent, but I am particularly grateful to the noble Baronesses, Lady Williams and Lady Park, who both suggested that there should be much wider dissemination of our report to diplomats and politicians both here and in Europe. That might fulfil some of our objectives and I am delighted that the noble Lord, Lord Tordoff, was present to hear that recommendation and hope perhaps that it will be carried forward.

It has been a great pleasure to take part in this debate and, as well as being involved as my last task as the chairman of the environment committee, to take part in such an exciting project. I apologise to my noble friend Lord Ponsonby for some of our comments on consultants. There are of course exceptions to every rule. On the other hand, every stereotype contains a grain of truth and I hope he will accept that perhaps not all consultants are as splendid as he is.

Once again, I thank all those who took part in the debate tonight. I commend the report to the House.

On Question, Motion agreed to.