§ Mr. Michael Forsyth
The Department's general policy is to seek to commit and spend Britain's full allocation from the European social fund (ESF) in an orderly and cost-effective manner. We also have an obligation to ensure that sufficient funds are available to pay individual sponsors of projects up to the level agreed at the time of their application.
The European Commission's method of accounting for ESF expenditure and the fluctuations in the exchange rate since the United Kingdom's departure from the ERM have however combined to cause difficulties. The Commission recalculates the value of a year's programme using the exchange rate current at the time the final claims for payment are submitted to Brussels. This is at least 18 months after the start of a programme. It is now clear that under this method we are likely to receive fewer sterling receipts than anticipated when 1991 and 1992 plans and programmes were originally drawn up and individual projects were approved. We are urgently seeking a solution to this matter with the Commission, to ensure that we can meet our obligations to project sponsors in full.