european and external relations committee agenda …€¦ · nus scotland welcomes the scottish...

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EUROPEAN AND EXTERNAL RELATIONS COMMITTEE

AGENDA

6th Meeting, 2013 (Session 4)

Thursday 21 March 2013 The Committee will meet at 9.00 am in Committee Room 6. 1. Foreign language learning in primary schools: The Committee will take

evidence from—

Lauren Paterson, Senior Policy Executive, Confederation of British Industry (CBI) Scotland; Rebecca Trengove, Head of Marketing and Corporate Affairs, Axeon; Robin Parker, President, National Union of Students (NUS) Scotland.

2. Foreign language learning in primary schools: The Convener, Clare Adamson, Willie Coffey and Jamie McGrigor will report to the committee on their respective school visits.

3. Scottish Government's Country Plan for China and International

Framework: Jamie McGrigor will report to the Committee from his recent visit to Marine Harvest Scotland.

4. Brussels Buletin: The Committee will consider the latest issue of the Brussels

Bulletin. 5. EU priorities for 2013: The Committee will consider a paper from the clerk.

Ian Duncan Clerk to the European and External Relations Committee

Room T3.40 Scottish Parliament

Edinburgh Tel: 0131 348 5191

Email: [email protected]

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The papers for this meeting are as follows— Agenda Item 1

PRIVATE PAPER

EU/S4/13/6/1 (P)

Written evidence

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Agenda Item 4

Brussels Bulletin

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Agenda Item 5

Paper from the Clerk

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European and External Relations Committee

6th Meeting, 2013 (Session 4), Thursday 21 March 2013

Foreign language learning in primary schools inquiry – written evidence

The Committee has received written evidence on its inquiry into the teaching of foreign languages in primary schools from the following organisation, in support of their oral evidence at this meeting:

The National Union of Students (NUS) Scotland The Federation of Small Businesses Scotland

Additionally, the Confederation of British Industry (CBI) Scotland has indicated that most of their policy position on foreign languages is summed up in chapter 12 of their recent education and skills survey1, and so that chapter is attached below.

1 http://www.cbi.org.uk/media/1514978/cbi_education_and_skills_survey_2012.pdf

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WRITTEN EVIDENCE FROM NUS SCOTLAND

Introduction NUS Scotland welcomes the Scottish Government’s proposals to enable all young people to learn two languages, in addition to their mother tongue. NUS Scotland believes that language skills are a huge advantage for students, and that supporting more individuals to acquire these skills would bring significant benefits for our society and for Scotland’s economy. NUS Scotland has had the privilege of working for a number of years now in the field of internationalising education, through our Scottish Government-funded projects, and this evidence is based on much of that work, and in particular, the findings of our research report Developing Scotland’s Graduates for the Global Economy: From Here to Where?2 NUS Scotland believes that learning additional languages is hugely beneficial in itself in broadening horizons, building skills and confidence, and opening up opportunities for individuals. However, we also know from our own research that language skills are increasingly sought after by UK employers when it comes to graduate recruitment. The decline in language learning is holding back both young people and Scotland as a whole. In the CBI’s 2010 survey of employer satisfaction with the skills of graduates and school-leavers, foreign language ability ranked last out of twelve skills areas and within the UK over two-thirds of employers were not satisfied with the language skills of young people.3 In the UK, studying languages at university has been shown to lead to higher than average employment prospects: three and a half years after graduation, more languages graduates are in work or study than their peers who studied Law, Architecture, Business or Computer Science, and earning high average wages and this evidence is echoed by a number of US and UK studies suggesting that meaningful wage premiums are enjoyed by those with language abilities.4 With both graduate unemployment and underemployment in Scotland at worrying levels, it has never been more pressing for students to enhance their employability, and pressures on graduates to ‘stand out from the crowd’ have never been greater. At present, Scotland lags behind much of the rest of Europe in terms of language skills and this skills shortage does need to be addressed. We firmly believe that by enabling all young people to learn at least two languages early on, we can help make Scottish college and university graduates more employable and support Scotland to emerge stronger in the global economy from the current downturn. Former Treasury economic adviser, James Foreman-Peck, who has calculated the effects of what he calls the ‘tax on trade’ represented by British relative underinvestment in languages has estimated that this currently equates to at least £7.3 billion, or 0.5% GDP.5

2 For the full version of the report, see http://www.scotlandgoesglobal.co.uk/research-videos/ 3 Ready to Grow: Business Priorities for Education and Skills – Education Skills Survey 2010 (CBI, 2010) p. 23. 4 The Economic Case for Language Learning and the Role of Employer Engagement (Education and Employers Taskforce, 2011), p. 5. 5 Ibid.

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However, we also believe that we need to go beyond increasing language learning in primary schools and ensure greater access to, and uptake of, language study later on in education. Our research has shown that a lack of language skills can be a barrier to both studying and working abroad, both of which are incredibly valuable experiences which increase individuals’ confidence and employability. Students who are currently beyond primary school age could therefore benefit from an increased number of opportunities to study languages. Providing the opportunity for all young people to learn languages from primary school will also help to create a more level playing field for young people from all backgrounds to access the opportunities that knowledge of additional languages can provide. In line with the main focus of NUS Scotland’s work on this topic, this evidence will look specifically at the role of languages in economic development, and the benefits of language skills to the future careers of Scotland’s young people and the future economic success of Scotland.

Project background The overarching objectives of NUS Scotland’s Developing Scotland’s Global Citizens project, which began in September 2011, are to increase student outward mobility opportunities and encourage greater uptake of study-abroad programmes by Scottish students. Given the increased competition for fewer graduate vacancies, there has been an increased interest in the education sector in the role international experience may play in the employability of students. This is reflected in the widespread support NUS Scotland has received from across the sector, including from the British Council, the Higher Education Academy (HEA), Universities Scotland, Scotland’s Colleges, sparqs, the Scottish Funding Council, the Quality Assurance Agency (QAA) and Young Scot, with IBM and Scottish Development International (SDI) on the project steering group. The project has four strategic themes: raising the profile of European mobility opportunities; fostering graduate attributes through mobility; supporting the international learning experience at institutional level; and, encouraging a partnership approach across the Scottish educational sector. The project is currently working in Scottish schools and universities to deliver new training on study-abroad opportunities which was developed in conjunction with the Scottish European Educational Trust (SEET). The training module can be delivered by teachers, university staff, or one of our ‘Scotland Goes Global Ambassadors’. Scotland Goes Global Ambassadors are students who have experienced study-abroad opportunities, and the training is designed to open students’ minds to the diversity of their local communities, the benefits of studying abroad, and the opportunities which might be available to them. We believe giving young people a global outlook at an early age is really important to their future success and that increasing language learning earlier on in schooling will be an important part of this. As part of the Developing Scotland’s Global Citizens project, this academic year we have also launched our Scotland Goes Global initiative, the year of study abroad. Employer and sector engagement, a key part of our project work, has allowed us to gain an insight into the important role of language learning as well as international experiences in Scotland’s economic development.

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Uptake of language learning NUS Scotland’s work with students, academic staff and Scottish-based employers as part of the Scottish Government-funded Developing Scotland’s Global Citizens project has highlighted the severe lack of linguistic ability among Scottish graduates compared to their bilingual and trilingual European counterparts. At the same time there is considerable evidence of the benefits of language skills for Scottish graduates and the Scottish labour force more widely. As shown in Figure 1 below, currently the number of school students taking French and German at Standard Grade is falling and this coincides with the decreasing popularity of language learning in universities.6 The introduction of Curriculum for Excellence supports increased engagement in language learning and international opportunities, but this has not yet brought about an increase in the numbers of pupils choosing to learn languages. Figure 1.

Table 1: SCLIT (2010) http://www.strath.ac.uk/media/faculties/hass/scilt/statistics/ML_in_S4-S6_Overview.pdf Increasing language learning in primary schools will increase the opportunities available to students to continue language learning later in their school career and increase their confidence in language learning, both of which could help to boost uptake of languages in secondary and tertiary education. However, we also believe that colleges and universities could increase the range and number of opportunities available to students to learn languages or incorporate language learning into their studies. Languages and studying abroad Our research has highlighted that an absence of language skills can be a key barrier preventing students from taking advantage of study abroad opportunities while at college or university, meaning students may miss out on what are extremely valuable experiences for both personal development and improving employability. This language barrier may be a key factor in the comparatively low numbers of Scottish students taking advantage of mobility opportunities. Despite the fact that Scotland sends a higher percentage of students on Erasmus placements than the rest of the UK, more needs to be done to support Scottish graduates’ employability in an increasingly globalised labour market. In terms of both

6 See http://www.strath.ac.uk/media/faculties/hass/scilt/statistics/ML_in_S4-S6_Overview.pdf

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language ability and study abroad experience, Scottish students remain at a disadvantage to their bilingual and trilingual European counterparts. For example, over 30% of German students (24,029) undertook a part of their study abroad in 2009/10 and these figures are expected to rise with a target of 50% set by the German Federal Ministry of Education and Research (BMBF). Taken in the wider context, during the academic year 2009/10, 32 countries took part in the Erasmus programme (the 27 EU Member States, Croatia, Iceland, Liechtenstein, Norway and Turkey). Only two of these countries – Croatia and Romania – had fewer Erasmus students in proportion to their overall graduate numbers in 2009 than the UK.7 Last year witnessed an 8% increase in Scottish Erasmus study abroad figures amongst students studying at Scottish HEIs (1,243 students in 2010/11 compared to 1,148 students in 2009/10).8 While this increase is welcome it still means that less than 1% of students in Scotland undertake Erasmus study. Furthermore, the actual number of Scottish students that study abroad (as opposed to students in Scotland) may well be fewer still. While last year’s figures are not yet available from the University of Edinburgh, between 2005/6 and 2007/8 non-Scottish students made up 82% of their total Erasmus student figures. At the University of St. Andrews, non-Scottish students made up 69% of all outgoing Erasmus students in 2010/11 and 67% in the previous academic year. At Heriot-Watt University, non-Scottish students made up 40% of all outgoing Erasmus students in 2010/11 and 43% in 2009/10. A larger-scale study needs to be undertaken before we can properly assess this issue as the student demographic is considerably different depending on the institution, but out of a total of 1,243 students studying in Scotland who went on Erasmus last year, we can safely say that a significant majority of these were not Scottish but students from the rest of the UK (RUK students) and EU students competent in languages other than their mother tongue.9 The main reasons for low student study abroad uptake are well documented and the most recent research findings, by the British Council and YouGov, illustrate the barriers to undertaking international experiences. The second most common response to the students being asked why they had never worked, lived or learnt abroad was that they felt their foreign language skills were not good enough.10 This is something commonly echoed by secondary school students in Scotland when asked by our Global Ambassadors why they might not choose to study abroad. Increasing language learning in primary schools could therefore have a beneficial 7 Erasmus – Facts, Figures & Trends: the European Union support for student and staff exchanges and university cooperation in 2009/2010 (European Union, 2011), p. 25. 8 The biggest number of outgoing students originated from Spain (27,448) followed by France (24,426) and Germany (24,029). The annual growth rate was highest in Cyprus (38.2%), followed by Estonia (31.6%) and Turkey (15.8%). The annual growth rate of outgoing students was above 10% in nine countries: Bulgaria, Cyprus, Estonia, Spain, Ireland, Latvia, Sweden, Iceland and Turkey. See Lifelong Learning Programme: The Erasmus Programme 2009/10 - A Statistical Overview (European Commission, 2011), p. 12. 9 For more on study abroad and its link to graduate employability, see Developing Scotland’s Graduates for the Global Economy: From Here to Where (NUS Scotland, 2012). 10 Next Generation UK: Research with UK Undergraduates Aged 19-21 (British Council/YouGov 2011), p. 52.

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impact on access to these opportunities by boosting the language skills of all young people in Scotland. Languages, study abroad and employability Missing out on study abroad opportunities due to concerns around language skills may be damaging to the future employability of Scotland’s young people and students. Within the UK, there are clear signs that employers are keen to recruit graduates with study-abroad experience: a report from the Confederation of British Industry (CBI) in 2010 found that 55% of employers warned of ‘shortfalls’ in British students’ international cultural awareness.11 In a recent British Council/Think Global survey, 75% of surveyed chief executives and board level directors of businesses in the UK think we are in danger of being left behind by emerging countries unless young people learn to think more globally, and 74% are worried that many young people's horizons are not broad enough to operate in a globalised and multicultural economy.12 This is symptomatic of the fact that despite attracting very high numbers of international students to Scotland, the process is far from reciprocal. Equally, students are increasingly seeing value and benefit to the notion of employability, and how it can help to distinguish them within the graduate labour market. Some argue that we are seeing the emergence of an ‘economy of experience’13, centred on students increasingly attempting to make themselves stand out in an ever more competitive field of graduates with similar degrees and results, borne out by the expansion of higher education over the past decade. Despite this, Scottish students remain far less mobile than their European counterparts with lack of languages being a significant deterrent. Conclusion NUS Scotland believes there is a clearly identified need to increase awareness, availability and uptake of language learning as part of a quality primary, secondary and tertiary education. Increasing language learning in primary school will support more young people to study languages later in education and can also form part of creating a more global outlook for all of Scotland’s young people. We also believe that language learning later in education should be supported and encouraged and increased opportunities should be available to study languages or while at college or university. We believe that increasing language learning will enhance the employability of young people by equipping them with the skills to compete in an increasingly globalising economy and society. Greater language skills will also help to remove a key barrier which is currently preventing young people in Scotland from taking advantage of opportunities abroad during their time in education. We believe it’s important that Scotland’s young people know about the international opportunities that are open to them, and waiting until students enter the doors of a

11 Ready to Grow: Business Priorities for Education and Skills (CBI, 2010), p. 23. 12 The Global Skills Gap: Preparing Young People for the New Global Economy (British Council/Think Global, 2011), p. 4. 13 The Mismanagement of Talent: Employability and Jobs in the Knowledge Economy (OUP, 2004), p. 220.

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university or college, for many, is leaving it too late. We hope that Curriculum for Excellence will help to create a more international outlook for young people and we believe the experiences of our Scotland Goes Global Ambassadors will help to inspire secondary school students to explore language learning and study abroad opportunities as they choose their future education and careers. We believe language skills have a crucial role to play in Scotland’s future in economic development, a point made clear recently by Jane Gotts, International Director at SCDI, when speaking recently about our Scotland Goes Global initiative: “Building a sustainable world economy depends on how we support the next generation of global leaders. Scotland must adopt a global outlook and encourage Scottish students and graduates to ‘think globally, act locally’.The ‘Scotland Goes Global’ initiative is fundamental in helping Scotland compete in a global marketplace alongside playing a crucial role in helping Scotland build its international reputation for excellence”.

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WRITTEN EVIDENCE FROM THE FEDERATION OF SMALL BUSINESSES (FSB) SCOTLAND

Thank you for giving us the opportunity to present our views on the European and External Relations Committee’s above inquiry. The FSB is Scotland’s largest direct-member business organisation, representing around 20,000 members. The FSB campaigns for an economic and social environment which allows small businesses to grow and prosper. As outlined in discussions with committee officials, FSB Scotland has not previously undertaken any detailed work on this issue. We have therefore limited our response to the role of languages in economic development, specifically with regard to small businesses. In the context of ever greater economic globalisation and the growth of the BRIC nations, the acquisition of language skills in the workforce will continue to be relevant for Scotland to compete in the global market. The key questions, then, are:

1. To what extent are languages a barrier to trade for FSB members? 2. To what extent are language skills important for FSB members?

With the limited evidence at our disposal, our research14 suggests that the main barrier to trade for UK members (74%) is the lack of suitable product/service to export. Indeed, only 5% of members cite language/cultural barriers as a reason for not exporting. Moreover, when asked about the main challenges small businesses needed to overcome when exporting goods and services, only 15% cited language/cultural barriers. The top four challenges were:

Fluctuating exchange rate/foreign currency (35%) Difficulty in finding customers (24%) Lack of finance/working capital (23%) Difficulties around getting paid (22%)

These statistics can be partly explained by the fact that three of the top five countries businesses expect to export goods and services to in the future are English speaking nations. However, it is clear that for many of our UK members language skills are not currently considered a significant barrier to trade. Indeed, while we broadly agree that there is an economic case for improved language skills, our evidence suggests that these are not currently priorities for most small businesses considering exporting. The most frequently cited skills problems for small businesses15 are: sales/marketing/PR (46% for business owners and 34% for employees); IT (27% for both business owners and employees); and ‘softer’, interpersonal skills (32% regard customer service as integral to business growth).

14 Cited from a forthcoming FSB report into exporting. 15 See: “Raising the Standards: An FSB Skills Survey”, Federation of Small Businesses, 2011.

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On a slightly related matter, we also sought feedback from tourism businesses in relation to language teaching. Most agreed that language skills would be an advantage to any tourism business. However, a far greater priority was considered to be a local workforce with stronger interpersonal and customer service skills. This, rather than language skills, was felt to be the greatest challenge to workforce skills which would enable businesses to make the customer journey more authentic. Andy Willox FSB Scottish Policy Convener

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EXCERPT FROM CBI SCOTLAND EDUCATION AND SKILLS SURVEY

11. Communication means business Operating effectively in a global economy relies on the right language skills – and the UK has the worst foreign language proficiency in Europe. Staff who can communicate at least conversationally – combined with an understanding of the local culture – can make all the difference in the conduct of business, consolidating relationships with existing suppliers and customers and opening the way to new overseas contacts. Key findings Nearly three quarters (72%) of businesses say they value foreign language skills

among their employees, particularly in helping build relations with clients, customers and suppliers (39%)

One in five firms (21%) is concerned that weaknesses in foreign language proficiency are losing them business or is uncertain whether this is happening

Among firms concerned about shortfalls in language proficiency, half (52%) are looking to recruit staff with the appropriate skills.

A global market demands language skills The UK’s future relies on our ability to compete in international markets. Our share of global exports declined from 5.3% in 2000 to 4.1% in 2010, continuing a long-running decline.16 If the UK is to achieve an export-oriented economic recovery, we need to break into and succeed in high-growth markets. Effective communication with potential suppliers, customers and those regulating markets is an essential part of achieving that. The UK has the worst foreign language skills in Europe, and there is a strong argument that limited language abilities and cultural awareness are acting in effect as a tax on UK trade.17 While English is currently the international language of business – in itself a real benefit for the UK – there are enormous advantages for British businesses if they have employees in key roles with the skills to communicate competently in the local language. The many businesses linked to the high-growth economies of the Far East and Latin America recognise the value of employees who understand the culture and can operate effectively in the different business environments of these countries – and an understanding of the language is often a crucial first step.18 Language skills serve varied purposes While around a quarter (28%) of businesses say they have no need for foreign language skills, for around one in 20 organisations (5%) the ability of at least some members of staff to speak one or more foreign languages is an essential core competence for the business (Exhibit 61). Much more commonly, fluency in another language helps in the conduct of business and can assist staff in their careers. Around two in five employers (39%) see foreign language ability as helpful in building relations with overseas suppliers, customers and other contacts, while one in five 16 Winning overseas: boosting business export performance, CBI, November 2011 17 The economic case for language learning and the role of employer engagement, Education and employer taskforce, November 2011 18 Language matters more and more, British academy policy centre, January 2011

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(22%) believe it assists staff mobility within the organisation, facilitating international working. Language skills are much more important in some sectors than across businesses as a whole, particularly for those leading the rebalancing towards a more export-oriented economy. For example, over half of firms in manufacturing (59%) and in engineering, hi-tech/IT and science (55%) see foreign language skills among staff as helpful in building relations with overseas contacts, while a third report foreign language skills as assisting staff mobility within their organisation (33% in manufacturing and 32% in engineering, hi-tech/IT and science). Exhibit 61 Need for employees who can speak foreign languages (%) All respondents Essential core competence for our work 5

Helpful in building relations with overseas contacts 39

Assist staff mobility within our organisation 22 Beneficial, but not a requirement when recruiting staff

46 Needing foreign language skills in the next couple of years 11 No need for foreign language skills 28

Manufacturing Essential core competence for our work 6



59 Needing foreign language skills in the next couple of years 14 No need for foreign language skills 16

Engineering, hi-tech/IT & science Essential core competence for our work 9



56 Needing foreign language skills in the next couple of years 6

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No need for foreign language skills 15 There’s business at stake… We asked respondents whether they are concerned that they are losing business because of weaknesses in foreign language skills among their employee (Exhibit 62). While most firms do not feel they are missing out, one in five (21%) said they are concerned they are losing business opportunities or do not know whether this is happening. Among manufacturing firms, the proportion concerned that they are losing business as a results of weak language proficiency rises to a fifth (20%), with a further 8% unsure. Exhibit 62 Concern about loss of business caused by weak foreign language skills (%) Yes 11 Don’t know 10 No 79

… so some employers are taking action Among those firms recognising foreign language proficiency as important and concerned they may be losing business because of weaknesses among staff, half (52%) are looking to recruit new staff with the necessary language skills (Exhibit 63). Other employers worried about potential loss of business are addressing the issue by raising the language skills of their existing staff, using private providers (21%), FE colleges (6%) or in-house language training (15%). INSERT AS A HORIZONTAL BAR CHART Exhibit 63 Steps to address weaknesses in language skills (%)

Recruiting new staff with language skills 52

Sending staff on courses run by private providers

21

Providing in-house language training 15

Sending staff on courses delivered by FE colleges

6

Other 3

European languages still top the list but this will change The major European languages are those most commonly mentioned as being in demand (Exhibit 64), led by German (50%) and French (49%). France and Germany still represent – along with the US – the largest export markets for British goods. Spanish too is in demand, sought by nearly two in five (37%) of those employers wanting employees with language skills. Spanish is valued both in a European context but also as the lead language of fast-growing economies across Latin America (and increasingly parts of the USA).

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Language skills geared to business in China and the Middle East feature prominently (of those valuing staff with foreign language skills, 25% rate Mandarin as useful, 12% value Cantonese and 19%, Arabic). Employer demand for other languages shows a different trend, reflecting the need for language skills that can help in managing workforces in the UK from non-English speaking backgrounds. The scale and importance in the UK of the migrant workforce from Poland and other parts of central and eastern Europe is well known, so it is no surprise that many British employers value employees who understand the language and culture to achieve effective working relationships (with 19% rating knowledge of Polish as useful). Exhibit 64 Foreign languages rated as useful to the organisation (%) German 50 French 49 Spanish 37 Mandarin 25 Polish 19 Arabic 19 Other 17

Cantonese 12 Russian 11 Japanese 11 Portuguese 6 Korean 3

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Brussels Bulletin

Introduction

1. The latest Brussels Bulletin – Issue 84 is attached as the Annex.

Purpose of the Brussels Bulletin

2. The Brussels Bulletin is produced by the Parliament’s European Officer and is based on the key themes identified by the previous Committee as a result of its consultation on the Commission’s Legislative and Work Programme for 2011. These themes will be re-visited upon publication of the Commission Work Programme.

3. The current themes agreed by the previous Committee at its meeting on 14 December 2010 were—

Europe 2020

Cohesion policy

The Justice (Stockholm) Programme

Energy and climate change

Agriculture and fisheries

Multi-Annual Financial Framework

4. The European Officer provides early intelligence on expected developments, actions of the key players and detail of debate on these key themes, primarily through the Brussels Bulletin. This is circulated to relevant parliamentary committees and is published on the Parliament’s website. More detailed briefing can also be commissioned by a committee on any specific issue.

Recommendation

5. The Committee is invited to consider the latest issue of the Brussels Bulletin and to agree to forward it to relevant committees for their consideration.

Committee Clerk March 2013

NEWS IN BRIEF

Developments in the Eurozone Cyprus has become the 5th member of the Eurozone to receive a sovereign bailout (15 March 2013). In a departure from previous bailouts, Cypriot bank depositors will be expected to pay a tax on their deposits of between 6 and 10%. Multi-Annual Financial Framework (MAFF) MEPs voted to ‘reject in its current form’ the Multi-Annual Financial Framework (MAFF) (13 March 2013). The negotiations will begin in earnest in April 2013, with the MAFF returning to the Parliament for a plenary vote in June or July 2013. Common Agricultural Policy The Parliament, exercising the rights granted by the Lisbon Treaty, voted through a series of CAP reform amendments (13 March 2013). Trialogue negotiations (between Parliament, Council and Commission) are expected to begin on 11 April 2013.

SME support EU heads of state and government have supported a Commission initiative to tackle the regulations seen as the most burdensome for Small & Medium Sized Enterprises (15 March 2013). The list includes VAT legislation, working time, data protection and public procurement laws. MULTI-ANNUAL FINANCIAL FRAMEWORK (MAFF)

IN THIS ISSUE: Multi-Annual Financial Framework (MAFF) Developments in the Eurozone Common Agricultural Policy (CAP) SME support Upcoming events Contact details

ISSUE 84 MARCH 2013

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Current status MEPs voted to ‘reject in its current form’ the Multi-Annual Financial Framework (MAFF) (13 March 2013). What’s happening? The European Council reached agreement on a pared down budget at their last meeting, with funds falling to 1% of Gross National Income (from 1.13% in the previous round) (8 February 2013). The Parliament, exercising its right to confirm the budget, voted 506 to 161 (with 23 abstentions) on a resolution to reject the budget. The resolution voted on by the MEPs accepts the overall spending ceiling negotiated by the Council, but members are pressing for more flexibility between budget headings and annual planning periods. The resolution also states that the Council deal regarding specific policy areas (common agricultural policy, regional policy, etc.) have no value in the eyes of MEPs, the resolution says, reminding that these will be subject to separate negotiations in which Parliament and member states are on an equal footing. Parliament also calls for a mid-term review of budget spending, so as to give the newly-elected Parliament and Commission an opportunity to influence the budgets that they will inherit from today's legislators. The resolution highlights the problem of payment shortfalls, which can jeopardize EU programmes. In 2012, the Erasmus student exchange programme, the Research Framework Programme and the Social Fund all experienced budget shortfalls and required additional funding. The Parliament insists that outstanding bills from 2012 must be settled before concluding the MAFF negotiations. Parliament also wants a political commitment from member states that all bills falling due in 2013 will be paid in 2013, to avoid ‘rolling over’ a deficit into the new budget cycle.

The resolution gives Parliament negotiators a mandate to ensure that there is a maximum flexibility in the use of the 2014-2020 budget funds. Commenting on the vote, Parliament President Martin Schulz stated, ‘It is a great day for European democracy.’ He continued, ‘The Parliament wants to be taken as a serious partner.’ The Irish as holders of the rotating EU Council Presidency will now draft a roadmap to detail the next stage of the negotiations. It is likely that the negotiations will begin in earnest in April 2013, with the MAFF returning to the Parliament for a plenary vote in June or July 2013. (If there is no agreement by the start of 2014, the budget ceilings from 2013, adjusted for inflation, will apply). DEVELOPMENTS IN THE EUROZONE Current status Cyprus has become the 5th member of the Eurozone to receive a sovereign bailout (15 March 2013). What’s happening? Although the IMF described the economic performance of Cyprus as recently as 2008 as a ‘long period of high growth, low unemployment, and sound public finances’, two interlinking factors have brought the country close to default - deteriorating government finances and the Cyprus’ struggling banking sector. Cypriot banks made many loans to Greece during the period of easy credit, which helped to fuel a domestic property boom. By 2011, the IMF reported that bank assets - including all loans - were equivalent to 835% of GDP. The earlier bailout of Greece had a devastating impact upon the solvency of

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Cypriot banks. The Cypriot government declared its intention to support the failing banking sector but does not have the funds required to support a full re-capitalisation. This situation has been compounded by a lethargy in the economy, with growth stalled. The Eurozone and IMF will provide a €10bn (£8.6bn) bailout to the Cypriot Government. However, in a departure from previous bailouts, Cypriot bank depositors will also be expected to contribute:

Depositors with under €100,000 deposited must pay 6.75%

Those with more than €100,000 in their accounts must pay 9.9%

Depositors will be compensated with the equivalent amount in shares in their banks, guaranteed by future natural gas revenues

The levy is a one-off measure Cypriot President Nicos Anastasiades has stated that he had no choice but to accept a painful tax on the country’s bank deposits in return for international aid, saying the alternative was bankruptcy. In a televised address, the president called it the least painful option under the circumstances before going on to accuse Eurozone finance ministers of forcing Cyprus into this deal To engineer the bailout, all electronic fund transfers were halted. Although Monday 18 March 2013 is a bank holiday in Cyprus, the banks are not expected to open at all during the week. The news caused an immediate run on bank machines, most of which were depleted within hours. The bailout must be agreed by the Cypriot parliament, which had been expected to meet in emergency session on Monday 18 March. The parliamentarians are now expected to meet later in the week.

The President’s centre-right Democratic Rally party has only 20 seats in the 56-member parliament, and will therefore need the support of other parties. It is unclear whether the government’s coalition partners (the Democratic Party), will fully support the levy. Three other parties say outright they will not back the tax. Commenting on the moves, Speaker of the Parliament Yiannakis Omirou stated, ‘Essentially parliament is called to legalise a decision to rob depositors blind, against every written and unwritten law.’ Foreigners hold some 40% of the €68bn sitting in Cypriot banks, with Russia the largest depositor. Russian President Vladimir Putin has called the proposed levy ‘unfair, unprofessional and dangerous.’ Sharon Bowles MEP, chair of the European Parliament’s Economic and Monetary Affairs Committee, stated, ‘This grabbing of ordinary depositors’ money is billed as a tax, so as to try and circumvent the EU’s deposit guarantee laws. It robs smaller investors of the protection they were promised. If this were a bank they would be in court for mis-selling. The lesson here is that the EU’s single market rules will be flouted when the eurozone, ECB and IMF say so’

COMMON AGRICULTURAL POLICY Current status The Parliament, exercising the rights granted by the Lisbon Treaty, voted through a series of CAP reform amendments (13 March 2013). What’s happening? The Commission presented its CAP reform recommendations for 2014-2020 in October 2011. The package called for the harmonisation across the direct farm payments system, linking subsidies to environmental measures and capping

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payments for big farmers. It also recommended an end to quotas for sugar beets and planting rights for grape growers over the next two years. When the proposals were considered by the Parliament’s Agriculture Committee the committee, though divided, redrafted the greening proposals, replaced mandatory ‘greening’ measures with optional standards; exempting many smaller farmers, as well as those meeting national environmental guidelines, from compliance, reducing from 7% to 3% the amount of farmland that should be ecologically protected and exempting farmers from ‘cross-compliance’ with other EU environmental laws, including the Water Framework Directive. The panel also restored the market protections. EU officials have already acknowledged that the slow pace in approving a farm policy and the budget needed to finance it mean the new CAP will not be implemented until 2015- a year late Among the four sets of legislation, the closest votes were over common market organisation (which included the extension of quotas and protections for wine producers), followed by the rules for direct payments. The MEPs

Approved, (by 427 to 224), direct payments rules for farmers, (Pillar 1).

Approved (by 556 to 95) for rules for the rural development programme that involves shared financing with national governments (pillar 2);

Approved (by 472 to 172), rules for financing, management and monitoring.

Defying the agriculture committee’s recommendation, the Parliament did approve amendments aimed at compelling farmers to follow prescribed environmental standards in

order to receive up to 30% of their direct payment. Paolo De Castro MEP, chair of the Agriculture Committee called the outcome ‘a proper balance between food security and improved environmental protection, so that the new EU farm policy can deliver even more public goods to EU citizens.’ The proposals will next be discussed by EU leaders at their Council 18 – 19 March 2013. Thereafter trialogue negotiations (between Parliament, Council and Commission) will begin on 11 April 2013. SME SUPPORT Current status EU heads of state and government have supported a Commission initiative to tackle the regulations seen as the most burdensome for Small & Medium Sized Enterprises (15 March 2013). What’s happening? The Commission had asked around 1,000 SMEs and business organisations to identify the top 10 most burdensome EU laws in order to change or reduce them. At their recent summit, EU leaders have told the Commission to set out by June 2013 how it will reduce the burdens on SMEs. This will be followed by a requirement by October 2013 to produce a list of unnecessary European rules that need to be reversed. The following EU laws have been identified by SMEs as the 10 most burdensome:

REACH (Registration, Evaluation, Authorisation and Restriction of Chemicals)

VAT - Value added tax legislation General Product Safety and market

surveillance package Recognition of professional

qualifications

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Shipments of waste - Waste framework legislation - List of waste and hazardous waste

Labour market-related legislation Data protection Working time Recording equipment in road transport

(for driving and rest periods) Procedures for the award of public

contracts (public works, supply and service contracts)

Modernised customs code

EU leaders stated that ‘further action is required to reduce the overall burden of regulation at EU and national levels’ and that ‘member states should pay particular attention to avoiding additional burdens in the implementation of EU legislation.’ OTHER NEWS European elections. The European Council has approved a request by the Parliament to have the elections moved to May 22 – 25 2014, (earlier than the June date initially foreseen) (12 March 2013). In a related matter, the Commission has recommended that each political group should nominate a candidate for President of the European Commission before the 2014 European elections and display their European political party affiliations during their respective campaigns. At the 2009 European elections the average turnout in the 27 member countries was 43%. It was the lowest in Slovakia (19.6%) and highest in Belgium, where voting is obligatory (91%). Turnout in Scotland was the lowest in the UK at 28.6% (the UK average was 34.7%). Banking reform. The Parliament’s Economic and Monetary Affairs Committee has held a first exchange of views on the report of the European High-level Expert

Group on possible reforms to the EU banking sector. The report recommended mandatory separation of proprietary trading and other high-risk trading activities; possible additional separation of activities conditional on the recovery and resolution plan; possible amendments to the use of bail-in instruments as a resolution tool; a review of capital requirements on trading assets and real estate related loans; and strengthening the governance and control of banks. The Parliament is to prepare a non-legally binding report, setting out its position for European banking sector. Several MEPs expressed concern at the diverging approaches to banking sector reform currently being adopted in the EU (UK, France, and now Germany), and said that a common European approach is necessary. MEPs also criticised industry for its defensive attitude towards reforming the culture of the sector. A draft report by Arlene McCarthy MEP, will be considered by the committee on 21 March 2013. Amendments will then be considered on 7 May 2013, with a committee vote scheduled for 28 May 2013. The Commission will table a legislative proposal on structural reform by summer of this year. Clusters & Entrepreneurship The Commission has launched two calls for proposals: (i) Towards World-Class Clusters: Promoting Cluster Excellence; and (ii) Clusters and Entrepreneurship in Support of Emerging Industries. The first call will be implemented through a one-stage procedure inviting transnational, regional consortia to submit full proposals for adapting and using the results and tools developed by the European Cluster Excellence Initiative to improve cluster management capacity and excellence in their respective regions. The submission deadline is 6 June 2013.

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The second call invites interested regional organisations to submit, in the first stage, a short ‘concept note’ detailing their vision of how to promote entrepreneurship in regions by using clusters as platforms with a view to supporting the development of emerging industries. The concept notes must be submitted by 17 April 2013. The winners of this first round will then be invited to submit full proposals by 22 August 2013 outlining in detail how a ‘systemic approach’ shall be followed to reshape existing industrial value chains and/or to create new value chains thereby stimulating growth and employment. The Commission will organise an information day on these calls on 20 March 2013 in Brussels. Broadband. The Commission has published updated guidelines on how public monies can be used to build broadband networks in line with EU state aid rules. Next generation broadband can now be delivered in a number of ways, with technology neutrality a key principle. Public money can be used to help deploy ultra-fast broadband networks in cities, albeit with a number of conditions. Any subsidised network will need to demonstrate a clear step change from existing/planned networks, be open access, wholesale only and not lead to distortion of competition. The Commission wants Member States to set up national infrastructure databases. Any operator bidding for public money will also need to declare what infrastructure they own in the area and share that info with other bidders, to facilitate infrastructure sharing. Language learning. Language and culture Commissioner Androulla Vassiliou has declared that learning foreign languages can be a way for Europeans to exit the economic doldrums and find employment opportunities across borders (5 March 2013).

Addressing a conference on multilingualism at the Economic and Social Committee, Ms Vassilou said, ‘If we want more mobile students and workers, and businesses that can operate on a European and world scale, we need better language competences – and these must be better targeted to the current and future needs of the labour market,’. The latest European Commission figures show that in 2011 just 42% of European 15-year-olds were competent in their first foreign language, despite often having learned it from seven years of age. Furthermore, the figure differed hugely across different EU countries, with 82% for Sweden and just 9% for Britain. Vassiliou stated that her department will present a new multilingualism proposal in 2014. Maritime Spatial Planning. The Commission has put forward a legislative proposal for a Directive to establish a common European framework for the planning of maritime activities at sea and the management of coastal areas in Europe. The proposed Directive would require Member States to map all activities (offshore wind energy, submarine cable and pipeline routes, shipping, fishing and aquaculture) in maritime spatial plans (MSP) in order to make more efficient use of seas, and develop coastal management strategies that will co-ordinate measures across the different policy areas that apply to activities in coastal zones. Member States would need to ensure that their plans support sustainable growth, involve relevant stakeholders and co-operate with neighbouring states. Member States that already have MSP strategies will be able to use existing systems to incorporate these within the minimum requirements of the new Directive.

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With a single Directive, the Commission hopes to increase certainty for investors and reduce the administrative burden for national administrations and operators, while preserving ecosystem services. As an example of bad practice, the Commission cites the fact that that in certain countries up to 8 administrative agencies are involved in the award of permits for an aquaculture site. To this end, the Directive is proposing a “one-stop-shop principle”, which is expected to lead to economic benefits up to €1.6bn across the EU. Aquaculture. The Commission has made available a background ‘Roadmap’ document on its planned Communication on Strategic Guidelines for the promotion of sustainable EU aquaculture, (due to be published later in 2013). The Commission has already developed a guidance document on aquaculture activities in the context of Natura 2000 and other guidance documents concerning the Water Framework Directive and the Marine Strategy Framework Directive should follow. The aim of the guidelines is to help Member States overcome the barriers that prevent aquaculture from growing to its full potential, primarily through: (i) improving the competitiveness of aquaculture; (ii) encouraging economic activity; (iii) diversifying and improving the quality of life in coastal and inland areas; (iv) ensuring a level-playing field for aquaculture operators in relation to access to waters and space. The guidelines will seek to identify and overcome the main challenges for SMEs in relation to administrative burden, red tape, spatial planning, access to the market, and business diversification. There will be no legislation involved. Waste. The Commission has presented a Green Paper on plastic waste, which highlights the role plastic plays in today’s

world and assesses the impact plastic waste has on our environment. The Commission points in particular to the marine environment, currently ‘the world’s biggest plastic dump’, where plastic waste can persist for hundreds of years. The Commission contends that the issue of plastic waste is currently not adequately addressed through the current EU Waste Framework Directive. Various policy options are outlined to address this issue including phasing out or banning the landfilling of plastic waste and altering plastic design to increase recyclability. The Commission invites a discussion on these policy options as well as seeking advice on the effectiveness of potential recycling targets and economic measures such as landfill bans, landfill taxes and pay-as-you-throw schemes. The deadline of the consultation is 7 June 2013, with the results feeding into the review of EU waste policy foreseen in 2014. Fluorine (F) gases. The Parliament’s rapporteur on the proposed new rules to cut emissions of F-gases is proposing to introduce bans on HFC in new commercial refrigeration equipment. The Commission previously envisaged banning the gas in all industrial and commercial equipment with a capacity above 100kw by 2020 but has abandoned this in favour of advocating hermetically sealed systems. Rapporteur Bas Eickhout believes the F-gas legislation should ban all types of stationary refrigeration. He also proposes tighter restrictions in other areas mentioned in the draft F-gas regulation, such as the ban on HFC in hermetically sealed systems and quotas to reduce the quantities of bulk HFCs. Eickhout’s proposals will be discussed at the Parliament’s environment committee meeting on 20 - 21 March 2013. The deadline for tabling amendments to the rapporteur’s

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recommendations is 28 March 2013 and the committee are due to vote on 19 June 2013. Energy Finance. The Commission will launch a second round of calls for project proposals to benefit from the NER 300 financing scheme on 4 April 2013. Member States will then have until 3 July 2013 to select national projects which they will put forward for the scheme. The financing will be allocated to successful projects by mid-2014. The scheme allocates revenue from the sale of reserved emissions allowances under the EU Emissions Trading Scheme to support carbon capture and storage (CCS) and innovative renewable energy projects.. Carbon Capture & Storage (CCS). The Commission will publish its paper on the demonstration of Carbon Capture and Storage (CCS) in the EU on 27 March 2013. The paper follows the failure to allocate funding from the NER 300 mechanism to any projects (as none were able to secure the requisite national and industry backing). There is currently speculation as to whether the paper will take the form of an official Commission Communication or be presented as a working paper (which would give it a lower priority and represent a lesser political commitment. Energy infrastructure. The Parliament has adopted the new Regulation on guidelines for a Trans-European Energy Network (12 March 2013). The Regulation identifies 12 priority areas and calls for lists of projects (Projects of Common Interest – PCIs) which can be considered to contribute to these 12 priorities to be drawn up by regional expert groups for each area and approved by EU Governments and the Commission. The regional expert groups will comprise national Government representatives, the

European Commission, transmission system operators and project promoters. A time limit of 3 and a half years will apply for the granting of permits to identified projects of common interest included on the regional lists. The first lists of PCIs are expected to be published by July 2013. Sustainable transport. Aberdeen City Council came out top among three finalists (along with Toulouse, France and Ljutomer, Slovenia) for the 2013 Sustainable Urban Mobility Plans (SUMP) Award (part of the Commission’s urban mobility campaign). On presenting the award, Vice-President of the Commission and the Commissioner for Transport, Siim Kallas, said; ‘Aberdeen is at the forefront of an EU-wide drive to incorporate sustainability into urban mobility planning’ and commended the ‘strong role for citizens’ in Aberdeen’s plan. Alternative Dispute Resolution (ADR). The Parliament has voted to endorse the Commission’s proposals for a Directive on Consumer Alternative Dispute Resolution and a proposed Regulation on Consumer Online Dispute Resolution, the aim of which is to ensure a sound relationship between the mediation process and judicial proceedings, by establishing common EU rules on a number of key aspects of civil procedure (12 March 2013). Alternative Dispute Resolution (ADR) refers to schemes which aim to help consumers resolve disputes with traders without recourse to the courts when they have a problem with goods or services. ADR requires the appointment of a neutral third party to help settle dispute. Member States must now create dispute resolution bodies to deal with contractual disputes between consumers and traders. The agreement also covers disputes for

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products bought online and will create an information platform in all EU languages. MEPs also secured agreement that arbitration would be either free of charge for the shopper or cost only a ‘nominal fee’. The new rules will enter into force in April 2013. Croatian accession. The Parliament has agreed that eleven countries will each lose one seat in the European Parliament after the next elections to make room for Croatia, which is expected to join the EU on 1 July 2013. Austria, Belgium, Bulgaria, Czech Republic, Greece, Hungary, Ireland, Latvia, Lithuania, Portugal and Romania would each lose one seat in the European Parliament after the EU elections (22 - 25 May 2013). The decision is necessary to comply with the 751-seat limit set by the Lisbon Treaty and make room for Croatia, which will have 12 MEPs, one less than earlier projections. The Parliament currently has 754 MEPs. To bring the number in accordance with the Lisbon Treaty, Germany will lose three of its 99 seats, bringing its MEPs to 96, the maximum allowed by the Lisbon Treaty. Van Rompuy resignation. European Council Permanent President Herman Van Rompuy has announced that he will not seek an extension of his EU mandate, when it expires on 1 December 2014 (17 March 2013).

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UPCOMING EVENTS & MEETINGS

March 2013 April 2013 20 - 21 Informal meeting of European

Affairs Ministers 12 Eurogroup

21 Environment Council 13 ECOFIN (Finance) Council 26 – 27 Energy Service Directive -

Concerted action plenary meeting

15 – 18 European Parliament plenary

27 – 28 European Parliament Mini Plenary, Brussels

22 – 23 Informal meeting of Environment Ministers

27 – 28 EU Forest Director’s conference

22 - 23 Agriculture & Fisheries Council

23 – 24 Informal meeting of energy ministers

25 EU Presidency Tourism Conference

29 – 30 Conference on European Institute of Innovation & technology

29 – 30 Conference on gender equality and Horizon 2020

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CONTACT DETAILS Dr Ian Duncan Rond Point Schuman 6 B – 1040 BRUXELLES Belgique or The Scottish Parliament EDINBURGH EH99 1SP UK Tel: 0044 131 348 5226 Mobile: 0044 7785 306767 Email: [email protected]

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EU priorities for 2013 Background

The European & External Relations published its report on ‘The EU priorities of the Committees of the Scottish Parliament’ on 21 February 2013. The report was subsequently debated in the chamber on 27 February 2013.

As a result of administrative oversight, the Local Government & Regeneration (LGR) Committee was not consulted in time for their EU priorities to be included in the final report.

The agreed priorities of the LGR Committee are appended to this paper as Annex 1.

Next Steps

Following the consideration of the LGR Committee’s priorities, these will be published on the EERC website alongside the earlier report, and forwarded to the Scottish Government for information.

Recommendation

The Committee is invited to consider the priorities of the LGR committee as outlined in Annex 1.

Committee Clerk March 2013

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ANNEX 1 LOCAL GOVERNMENT AND REGENERATION COMMITTEE EU ENGAGEMENT 2013 - 2014 EU Reporter: Stuart McMillan MSP PROPOSALS FROM THE EUROPEAN COMMISSION’S WORK PROGRAMME 2013 There are no direct proposals or initiatives included within the European Commission’s Work Programme for 2013 which fall specifically within the remit of the Local Government and Regeneration Committee. However, there are a number of policies continuing (or completing) their legislative journey in 2013 that are of significance to the current work of the Local Government and Regeneration Committee, notably:

Negotiations over the structure and scale of the next Multi-Annual Financial Framework

The future of structural funds in Scotland

Public procurement rules

All of these areas are of significant relevance to the Local Government and Regeneration Committee, particularly given its current inquiries into ‘Public Services Reform: Strand 3 – Developing New Ways of Delivering Services’ and ‘Delivery of Regeneration in Scotland’. In addition, COSLA wrote to all Scottish Parliament EU reporters in January 2013, outlining their key EU priorities for 2013. It identifies key priorities for COSLA to:

Ensure that local development is a key pillar of the Scottish Partnership Agreement 2014-2020 (and safeguarding the specific status of the Highlands and Islands as a transition region);

Ensure that any new provisions secured in EU rules for Public Procurement are fully exploited in the Scottish implementation of the legislation, through the forthcoming Scottish Government Procurement Reform Bill;

Work on any other EU limitations that may be placed on shared service arrangements, which are also currently being negotiated in Brussels.

Committee’s agreed actions The areas outlined above were agreed by the Local Government and Regeneration Committee as its EU priorities for 2013, at its meeting on 27 February 2013. The Committee included these areas as its EU priorities for 2013 on the basis that future European funding is of vital importance to delivering regeneration activity in Scotland, and EU changes to public procurement rules could potentially impact heavily on Local Government, as approximately 40% of Local Government expenditure is spent through public procurement processes.

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The Committee therefore agreed to take evidence on the potential impact of changes to European Structural Funds from 2014 onwards on funding of regeneration projects, as part of the Committee’s current Inquiry into ‘Delivering Regeneration in Scotland’. In addition, in order to feed into the Committee’s Inquiry into ‘Public Services Reform: Strand 3 – Developing New Ways of Delivering Services’, and any future Committee consideration of the forthcoming Procurement Reform Bill, the Committee also agreed to write to the COSLA European Unit, seeking further information on:

The potential impact of new EU Public Procurement rules on Local Government, and

The impact of EU limitations on shared service arrangements for Local Government.

Finally, the Committee agreed to keep a watching brief via the European and External Relations Committee’s Brussels Bulletin on:

i. Multi-Annual Financial Framework (MFF) and the Scottish Partnership Agreement 2014-2020;

ii. European Structural Funds;

iii. Public Procurement;

iv. Shared Service arrangements.

Timescale for action or whether the issue is to be referred to the European and External Relations Committee The EU reporter and clerks will continue to monitor developments with these proposals, and will seek evidence as part of the Local Government and Regeneration Committee’s on-going inquiries. Any evidence received will be brought to the attention of the European and External Relations Committee for information and consideration. The EU reporter and clerks will keep these EU priorities under review in the light of developments to the Commission’s Work Programme throughout 2013.

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