1. Subheadline
European
Structural Funds
in London 2014-2020
Pre-consultation Event
2 October 2012

2. GLA PRE-CONSULTATION EVENT
2 October 2012
STRUCTURAL FUNDS IN THE UK 2014-2020
SUE BAXTER
Dept Business, Innovation & Skills

3. €147.2 billion = 1.12% of EU gross national income
Citizens, freedom,
security and justice
1%
Administration
6%
Sustainable growth:
Jobs, competitiveness,
regional development
46%:
of which
STRUCTURAL FUNDS
36% (€53 bn)
London: £545m
The EU as a global player:
including development aid
6%
Natural
resources:
Agriculture &
environment
41%
LONDON IN CONTEXT OF EU BUDGET
(2012 commitments)

4. EU NEGOTIATING CONTEXT
Economic landscape : recession & Eurozone crisis
EU budget & Structural Funds in particular :
more focussed on driving the EU forward vs global
competitors / EU 2020 (external)
Concentration of EU investment on top drivers of
EU growth & delivering UK National Reform
Programme
More flexibility to align EU funds to increase
impact (regional, social, rural and fisheries)
Streamlining red tape

5. EU ‘COMMON STRATEGIC FRAMEWORK’
INVESTMENT THEMES
1. Innovation and R&D
2. ICT: Improving access; quality and usage
3. SMEs: Improving competitiveness, incl. in the agricultural
and aquaculture sectors
4. Shift to low carbon economy
5. Climate change adaptation and risk management
6. Environmental protection & resource efficiency
7. Sustainable transport and unblocking key networks
8. Employment and labour mobility
9. Social inclusion and fighting poverty
10.Education, skills and lifelong learning
11.Improving institutional capacity for efficient public
administration

6. EUROPEAN COMMISSION’s UK PRIORITIES
SO FAR….
Increasing R&D spend &
‘localising’ impact of national investment
Improving access to finance for SMEs
More renewable energy
NEETS / youth unemployment;
marginalised groups into employment
Intermediate & higher level skills
What else?....

7. OPERATIONAL CHALLENGES
EU requirements:
Stronger performance management & accountability
– money tied to targets for first time
Greater combined impact for CSF fund investments
(to deliver strategic national / EU2020 targets)
UK ambitions:
Less red tape
Reduced cost & risk
Improved value for money
Empowered delivery partners to play a strong role

8. ‘LONDON: A ‘MORE DEVELOPED’ REGION
GDP/head more than 90% EU27 average
50% EU co-financing
At least 52% spend must be from European Social Fund,
of which 80% of each programme must focus on only 3
(possibly 4?) priorities at national level only
At least 20% ESF to focus on social exclusion at national
level (although ERDF spend might also count towards
the 20%)
80% ERDF to focus on only 3 (possibly 4) priorities:
Innovation
SME competitiveness
Low carbon and energy efficiency (at least 20%)
ICT ??

9. More integrated programmes / geographic flexibility
Integrated Territorial Investments (all 4 funds)
Urban development or Territorial strategy drawing on a
multiplicity of programme strands and programmes.
Aspects of management can be delegated to a city or NGO.
Community-led local development (all 4 funds)
‘Local Action Groups’ able to draw on all 4 Strategic
Framework funds according to an integrated plan.
Joint Action Plans (ERDF & ESF only)
Lump sum payments to a single beneficiary more than
€10m or 20% of an Operational Programme (whichever is
lower) to manage a group of projects aimed at a specific
purpose (but not for major infrastructure)
NEW PROGRAMMING FLEXIBILITIES

10. A FEW KEY QUESTIONS
What key technologies will need to be pulled
through over next 10 years to drive lower
carbon growth?
What key interventions will drive SME growth
in next 10 years?
What renewable energy investments are
required and what will they deliver?
How best to deliver higher level skills?
Where, when & how much?
How can London contribute to NRP targets?

11. STAKEHOLDER CONSULTATION
200 responses to online / email consultation in
April
77 local government; 14 LEPs
Key messages to Government
Reduce administrative burden
Support integrated programmes
Flexible programme boundaries
Fresh thinking on match funding
NEXT STEPS - London event : 7 December @ BIS

12. EU Commission
tests &
launches
proposals
Back to Member
States /
Commission
Ministers
agree
domestic
delivery
IDEAS INTO REALITY : CSF NEGOTIATIONS PROCESS
Identify,
develop and
test policy
options
Agree-
ment &
go live
European
Parliament
UK
consultation
Develop UK EU
budget
negotiating
positions
Develop UK
CSF
negotiating
positions
UK negotiates EU
budget
UK negotiates with Commission & other EU
countries
Develop programmes
Identify, develop and test policy options
EU - Eurozone crisis; downward pressure on EU budget; upward pressure on CSF funds to deliver results
UK – pressure to drive high impact growth; CSR; ministerial changes & elections
UK
consultation

13. Subheadline
European
Structural Funds
in London 2014-2020
Pre-consultation Event
2 October 2012

14. ERDF 2014-2020

15. A COMMON STRATEGIC APPROACH
Europe 2020: EU drive for greater impact, better
alignment & stronger accountability
Improved focus and prioritisation to drive faster economic growth
Better co-ordination and integration between EU programmes
Programmes focussed on delivering results and impact
More transparent, efficient, streamlined and simplified delivery
systems for beneficiaries

16. COMMON STRATEGIC FRAMEWORK
Opportunity to align substantial investments:
Regional economic development (ERDF)
Skills, employment & pre-employment (ESF)
And also:
Rural development
(EAFRD – currently part of the CAP)
Fisheries (EMFF – currently part of the CFP)

17. ‘LESS DEVELOPED’ REGIONS 2014-2020
GDP/head below 75% EU27
average
75%-85% EU co-financing available
for wider range of activities
Safety net” of 2/3 of previous
allocation for regions moving ‘up’
and out of this category
At least 25% spend must be from
European Social Fund
Likely to be West Wales and the
Valleys + Cornwall and Scilly
Isles

18. ‘TRANSITION’ REGIONS 2014-2020
GDP/head between 75% and 90% of EU27
average
60% EU co-financing
Safety net” of 2/3 of previous allocation for
regions moving ‘upwards’ into this category
At least 40% spend must be from European
Social Fund, of which 70% of each programme
must focus on only 4 priorities, with 20%
earmarked for tackling social exclusion at
national level
80% ERDF to focus on only 3 priorities
Likely to include :
– Devon
– Lincolnshire
– East Yorkshire & N. Lincolnshire
– Shropshire & Staffordshire
– South Yorkshire
– Merseyside
– Lancashire
– Tees Valley & Durham
– Highlands & Islands
– Cumbria
– Northern Ireland

19. ‘MORE DEVELOPED’ REGIONS 2014-2020
GDP/head more than 90% EU27 average
50% EU co-financing
At least 52% spend must be from European Social Fund,
of which 80% of each programme must focus on only 4
priorities
At least 20% ESF to focus on social exclusion at national
level
80% ERDF to focus on only 3 priorities:
Innovation
SME competitiveness
Low carbon and energy efficiency (at least 20%)

20. ERDF - key to local growth
LOCALISM - what do we mean by local areas & what are
the building blocks?-
Local leadership and decision-making
Role of role of Local Enterprise Partnerships – organising
programmes according to larger functional economic areas
Cities – as key drivers within programme areas utilising
scale and flexibilities, eg City Deals
Programmes that are consistent with national strategic
priorities and can lever public/private sector match funding
Should London be an MA in its own right?
ERDF in England - 2014-2020

21. ERDF AND THE OTHER EU FUNDS- What are the
opportunities and what do we mean by alignment?
ERDF & ESF - joint support for SMEs/entrepreneurship
/self-employment
ERDF and EAFRD and EMFF - building rural and coastal
economies
Mechanisms - mono/dual fund programmes; ITI/JAP/CLLD
LIABILITIES -how much responsibility and whose?
Administrative options that: maximise local relevance
and minimise budget risk
Commission parameters & drivers - Managing
Authority/Intermediary Body/NUTS2/Cities and Functional
Urban Areas/Fund alignment

22. Subheadline
European
Structural Funds
in London 2014-2020
Pre-consultation Event
2 October 2012

23. EUROPEAN SOCIAL FUND
Angus Gray
Head of European Social Fund Division

24. Draft EU Recommendations to the UK
Commission has indicated that the UK should focus
ESF on:
• Continuing to improve the employability of young people, in particular
those NEET, building on the Youth Contract.
• Ensuring apprenticeship schemes are taken up by more young people,
with sufficient focus on advanced and higher-level skills, and
involvement of more SMEs.
• Taking measures to reduce the high proportion of young people with
very poor basic skills, and the rate of early school leaving.
• Stepping up measures to facilitate the labour market integration of
people from jobless households.
• Fully implementing measures for facilitating access to childcare.

25. ESF 2014-2020: initial policy thinking
Focus on disadvantaged groups, particularly those not eligible
for, or not well served by existing mainstream provision.
Groups likely to include: young people not in employment,
education or training; troubled families; ex-offenders; unskilled
people.
Should also support growth agenda through funding self-
employment and entrepreneurship, and upskilling existing
employees, particularly in SMEs.

26. ESF 2014-2020: delivery issues
Existing arrangements are effective:
coherence with national policy priorities – ensures that ESF
complements and does not duplicate or support local alternatives
to the Work Programme or skills strategy;
match funding comes from national programmes;
delivery is efficient (low national overheads);
sound financial management through standardised national
procurement and control systems.
But they are not responsive enough to local needs, particularly
given Government’s localism agenda and focus on cities.

27. ESF 2014-2020: challenges
How can we get more local input into strategic planning of how
the funds are spent ?
What advantages could closer alignment of funds (especially
ESF and ERDF) bring ?
Are there arguments for different local delivery models ?
Which sub-national organisations have the capacity and
capability to make a difference and take on the financial risks ?

28. ESF 2014-2020: possible options
Different programming arrangements for (a) Helping
disadvantaged groups; and (b) Supporting Growth, aligned
with ERDF.
Different arrangements for engaging Voluntary and Community
Sector, particularly in delivering social inclusion activities.
Core cities having some level of greater local control.
Improved procurement arrangements with greater local
consultation, e.g. with LEPs.

29. Subheadline
European
Structural Funds
in London 2014-2020
Pre-consultation Event
2 October 2012

30. 2007‐2013 Operational
Programme
Interim Evaluation Findings
Stephen Nicol & Margaret Collins

31. Background
• Commissioned by EMPU to carry out an interim
evaluation of London ERDF 2007‐2013 Operational
Programme
• Focus on:
› Relevance of programme strategy and focus
› Progress towards OP objectives
› Progress towards commitment of funds and
achievement of indicators
› Quality and effectiveness of programme’s
implementation and management
› Learning for 2014‐20 ERDF programme

32. This Presentation
• Purpose: identify best practice from the current
Programme and provide lessons for future 2014‐2020
ERDF Programmes
• Structure
› Overview of key findings in relation to current 2007‐2013
ERDF programme
› Recommendations for 2014‐20 ERDF London Programme
› Summarise possible lessons for others

33. The London Programme
• Value: €181 million or £146.6 million
• Vision: promoting sustainable, environmentally efficient growth,
capitalising on London’s innovation and knowledge resources
with a focus on promoting social inclusion through extending
economic opportunities to communities, in areas where it is
most needed
• Priorities:
› Priority 1: business innovation and research and promoting
eco‐efficiency
› Priority 2: Access to new markets and finance
› Priority 3: Sustainable places for business
› Priority 4: Technical Assistance

34. Current Programme
• Effective Operational Programme (OP) in terms of strategy
• Implementation and delivery progressed largely as planned, except for
Priority 3 (green investment) where focus has evolved from what was
originally envisaged
£14.5 £13.9
£6.8
£16.1
£8.7
£51.7
£12.4
£11.6
£8.0
Fullly
Committed
Headroom
= £10.2m
Over commitment =
£1.8m
Headroom
=£3.2m
£0
£10
£20
£30
£40
£50
£60
£70
Priority 1 Priority 2 Priority 3 Priority 4
£ million
Defrayed Committed Pipeline Allocation

35. Current Programme
• Good progress towards programme targets, except jobs
• Lack of larger projects has reduced the delivery risk factors except for
JESSICA
• However, weaker strategic focus on larger projects may have impacted on
project delivery and resulted in management issues

36. Current Programme
• Key considerations for focusing remaining spend (£11m):
– Factor 1: projects which make a long‐lasting contribution
to the London economy and lead to jobs creation i.e. P1,
P2. Key focus.
– Factor 2: projects which can be delivered within the
timeframes ‐committed by December 2013 and spent by
December 2015
• Factor 1 likely to be relevant for future 2014‐20 ERDF
programme……

37. Considerations for the future 2014‐20
London ERDF Programme

38. Future Strategy and Focus
• Depending on funding available and future overall policy steer,
broadly retain strategy focus but ensure that there is a:
– Clear rationale for all investment (market failure or equity rationale)
– More forensic application of funds (e.g. Commissioning)
– Better alignment of targets framework with rationale for investment
– Focus on achieving biggest possible impact
• Move to a more strategic approach to allocating ERDF e.g.
commissioning:
─ Fewer and bigger projects
• Start planning for the 2014‐20 Programme now:
– Early stage discussions with DCLG, European Commission, GLA and
LMC
– Discussions with partner organisations particularly focusing on co‐
financing and possible projects which could be supported

39. Governance
• Explore opportunities for the GLA to become a Managing
Authority:
Strengths and opportunities
– Greater flexibility and control (including auditing)
– Greater consistency in advice to projects
– Potential for greater strategic alignment with GLA
Weaknesses and risks
– Financial risk to the GLA
– Administrative costs for Programme overall
– Alignment with other programmes in England
– Perceived transparency of Programme
• Ensure that there are stronger links between EPMU and GLA
whilst maintaining transparency
– At the start of the programme influence the focus and ensure there
are strong synergies with the Mayors EDS
– During delivery identify synergies with Mayor’s programmes

40. Spend and Targets
• Reduce the number of Programme targets:
─ Making it easier for projects and the programme as a whole
─ Ensuring that targets are meaningful (e.g. environmental projects
monitored by CO2)
• Place stronger emphasis on achieving targets especially results
and impacts. Key considerations:
– A more sophisticated approach to global target setting at the outset
i.e. realistic unit cost per job to ensure in line with other programmes
and with support provided (e.g. CO2 reduction for environmental
projects)
– Developing provisional targets at the start and then moving to
finalised targets within 12 months
– Tailored approach to target setting for individual projects
• Explore the potential for co‐financing to support future project
delivery

41. Key Points for 20014-2020 Programme
Developing
OP document
• Clear vision, objectives and actions which are explicitly
linked to local and regional policy aspirations
• Needs to reflect changing economic conditions and
emphasise economic growth and job creation
Committing
Funds
• Pitfalls of open bidding…a strategic approach built on a
clear strategy informed by a partnership approach
• Support projects with a clear rationale (e.g. market
failure/equity) which lead to strong economic impact
Delivery
• More post contract support during delivery and
particularly on collection of evidence (e.g. standardised
forms)
• Consistency of advice across project managers and audit
authority
Monitoring
• Greater emphasis on achieving targets and better
alignment with programme rationale
• Appropriate number of targets which are meaningful
and tailored to individual projects
• A more sophisticated approach to target setting e.g.
realistic unit cost per job

42. Any Questions?

43. Contact Details
Stephen Nicol ‐ Director
s.nicol@regeneris.co.uk
07818 067 309
Margaret Collins – Associate Director
m.collins@regeneris.co.uk
07826 872 218