Scottish Government

6 CO-ORDINATION WITH OTHER FUNDS

Co-ordination of the Structural Funds with other relevant funding streams is not just a regulatory requirement, but given greater importance in the 2007-13 programming period because the scale of funding in Lowlands & Uplands Scotland is so reduced, making it more critical that Structural Funds work closely with other sources of funding. Similarly, the scope of eligibility in the 2007-13 programming round is more limited than in previous rounds, giving greater opportunities for Structural Funds to work in combination with other, similarly focused policies.

In this context, there are several relevant funding streams. Chapter 3 discussed the match between Structural Funds and the aims of domestic funding streams. This chapter discusses how the ERDF Programme will work closely with other EU funding, specifically:

• the European Regional Development Fund;
• the European Territorial Co-operation Objective;
• EU support for agriculture and fisheries;
• EU research funding;
• European Investment Fund and European Investment Bank support; and
• the EU Lifelong Learning Programme.

6.1 European Regional Development Fund

As the other major funding stream within EU cohesion policy, it is essential that ESF works closely with the European Regional Development Fund ( ERDF), while recognising the distinctive objectives of the two Funds. In parallel with this ESF programme, there will be a European Regional Development Fund programme for the Regional Competitiveness and Employment Objective of the Structural Funds, covering the same eligible area. This is an important change from the 2000-06 programming period, where ESF (through Objective 3) was not only available in much wider territorial area than ERDF funding (through Objective 2), but it was available in two programmes (not only the Objective 3 programme, but also in the Western Scotland Objective 2 programme). The geographical contiguity between both the ESF and ERDF programmes and their mono-fund nature should enable strong co-ordination between the two funding streams to take place.

The experience of the 2000-06 programming period in co-ordinating ESF and ERDF funding (as discussed in Section 3.2 above) has fed into developing the approach for the 2007-13 programming period. As the mid-term evaluations of the 2000-06 programmes attested, ESF and ERDF co-ordination was broadly successful but there have been lessons to be learnt. Foremost among these has been the need to build in greater complementarity at the start of the programme, not least with respect to setting up formal mechanisms to ensure that co-ordination takes places systematically and that it is monitored and assessed on a regular basis.

The main co-ordination mechanism will be through a single Programme Monitoring Committee overseeing both the ESF and the ERDF programmes for the whole LUPS area. The arrangements for the Programme Monitoring Committee ( PMC) are discussed in detail in Chapter 7.

On an annual basis, the use of the funding flexibility allowed by the General Regulation will be reviewed. Under the Article, up to 10% of total ESF Programme resources can be spent on ERDF-related expenditure. This can enable projects to avoid unnecessary applications on projects where such activities are likely to be a small proportion of total project funding. It is anticipated that this flexibility will not be used extensively, but only to support limited project activity (as set out in the priority descriptions in Chapter 4). It will be expected that use of the facility will be exceptional and will only represent a small share of any single project's costs. Projects would need to provide clear justification for the need to include ERDF-type expenditure. At the start of the programming period, the Managing Authority will set out detailed guidelines on the types of activities that could be covered by the flexibility rule. The Managing Authority will monitor spending on ' ERDF' expenditure and provide the information as part of the annual report on ESF- ERDF co-ordination.

One of the ESF Programme priorities will be delivered jointly with one of the priorities in the ERDF programme for the LUPS region. Joint awards of funding under Priority 1 of the ESF Programme and Priority 3 (Urban Regeneration) of the ERDF Programme will be made to projects making linked separate applications under each priority. Priority 1 of the ESF Programme concentrates on supporting those outside the workforce to secure employment, particularly among the most disadvantaged groups, and has a clear strategic fit with the community economic development focus of Priority 3 in the ERDF Programme. Projects will not be required, but will be encouraged to put forward action plans that will show how ERDF and ESF funding can be used in tandem within the same project, although projects will not be required to apply for both Funds. While applications will need to be made separately to each Programme, appraisal and project selection between both programmes will be co-ordinated through joint advisory groups (as described in the Implementing Provisions chapter below). Applications will need to be specific in allocating distinct activities, expenditure and outcomes to each Fund. Projects will also be required to report on the co-ordination between both sets of Funds on an annual basis.

Community Planning Partnerships

For the first two years of the period, the Programme will make limited use of the Community Planning Partnership ( CPP) model for delivering some funding. As set out in Chapter 3 above, the CPPs are local networks of key community regeneration and social inclusion actors which are charged with setting out their collective goals and spend on tackling regeneration/inclusion within Scottish-wide policy through Regeneration Outcome Agreements, which are the core framework documents for urban regeneration and social inclusion spending and activity within Local Authorities. The CPPs include the key bodies responsible for delivering urban regeneration and social inclusion policies at a local level - they are the only such partnerships to have such bodies. Structural Funds support would enable the CPPs to add value and achieve higher outcomes with the ROA strategies for which they have responsibility for developing and implementing.

The partnership-based approach and the use of co-ordinated public funding offers clear opportunities to the Programme to extend the value added of the Funds by integrating support from ESF Priority 1 (Progressing into Employment) with ERDF Priority 3 (Urban Regeneration). An example of such an integrated bid could include: funding the development of e-learning facilities under the ERDF Programme and the rolling-out of an e-skills learning project for target groups under the ESF Programme as well as support for some of the local initiatives taken forward by the Urban Regeneration Companies.

Funding will be available to support a number of CPPs to deliver outcome agreements under Priority 1 of the Programme in conjunction with ERDF Priority 3. These agreements will be directly linked to the Regeneration Outcome Agreements ( ROAs) for the area - CPPs will be required to demonstrate how the funding will take forward the strategic goals of the ROAs and achieve additional, high value-added outcomes. The funding will be allocated on a competitive basis and using the eligibility criteria of both priorities for selection (notably the geographical criteria) - more detail on this is provided in Chapter 7. Selection will be on the basis of the eligibility criteria set out in the priority description above as well as the capacity of the CPPs to administer the Funds successfully. Detailed criteria - as well as further examples of integrated action plans - will be set by the Programme Monitoring Committee and provided by the Managing Authority in advance of the bidding round.

The approach will be particularly important in ensuring that there is clear demarcation with any LEADER activity being taken forward at local level. The CPPs will be expected to show a clear distinction between LEADER and ESF activity within their outcome agreements.

Other Co-ordinated Activity

Less formally, Priority 2 of the ESF Programme has also been designed to complement Priority 2 (Enterprise Growth) of the ERDF Programme. The focus of Priority 2 on the skills needs of entrepreneurs and SME managers will complement the support of Priority 2 in the ERDF programme on the enterprise development needs of SMEs, new enterprises and entrepreneurs. In addition, Priority 3 of the ESF Programme will also complement the support for higher and further education service provision eligible through ERDF Priority 4 (Rural Development). Where complementary activities fall into these priorities, co-ordinated joint applications will be invited to ensure that EU funding for projects is as integrated and strategic as possible. Such activity will be distinct from the Community Planning Partnership activity, as it will be taken forward on a case-by-case basis with individual projects that are in a position to deliver high value-added through activity linking together two different priorities.

6.2 Territorial Co-operation Objective

As well as the ERDF and ESF programmes under the Regional Competitiveness and Employment Objective, there are a number of programmes in the different strands of the Territorial Co-operation Objective which cover part of the LUPS area. In the transnational co-operation strand, there are two relevant programmes. The Northern Periphery Programme, which principally covers the Highlands & Islands, allows some eligibility in the LUPS area. Parts of the area are eligible under programmes for the North Sea (Scotland's east coast), Atlantic Coast (Scotland's west coast) and North-West Europe (the whole of Scotland), and again, their priorities relate to the ESF Programme's priorities. Lastly, under the cross-border co-operation strand, the LUPS area will be eligible for support from a programme with partners in Northern Ireland and Ireland.

Activity supported under these Co-operation programmes will be co-ordinated, where appropriate, with the ESF Programme through the Managing Authority. However, the scope for overlap is limited. There is also an option for inter-regional co-operation to be pursued as a strand of the ESF Programme. Given the limited funding and the greater effectiveness of keeping co-operation activities under a single banner, the option is not currently envisaged for the LUPS area in the 2007-13 programming period.

Transnational and interregional co-operation actions may also be supported within all priority axes of the programme. Transnational arrangements will provide the opportunity to recognise activities being addressed by programmes elsewhere in the EU which can positively influence the delivery of the Programme in Scotland. Transnational ties with other Member States will operate at a national level through the Managing Authority. The Managing Authority will set out, in guidance, how transnational and inter-regional actions will operate. The Managing Authority will work with the Commission and appropriate national authorities to ensure that ESF does not support operations being concurrently supported through the programmes supported under the Co-operation Objective.

6.3 The European Agricultural Fund for Rural Development

Both the General and the ESF Regulations specify that the Operational Programmes must set out how ESF and the European Agricultural Fund for Rural Development ( EAFRD) will complement each other. EAFRD in Scotland is governed by the Scottish Rural Development Plan, which covers the whole of Scotland. The Managing Authority for the Fund is the Scottish Government Rural Directorate.

The ESF Programme and the Scottish Rural Development Plan ( SRDP) have been developed in parallel by the Scottish Government with particular attention given to the areas where project eligibility could overlap. The consultations on the two sets of documents made explicit reference to each other with responses solicited on the relationship between the two.

The main area where demarcation is important is with Axis 3 of the SRDP. Both programmes have some common areas of scope, as set out by their respective regulations. To ensure that there is no overlap in eligibility, but at the same time, that there is full complementarity in the activities supported, the lists of eligible activities of both the ESF Programme and the SRDP have been drawn up so that projects receiving funding through one stream in one phase of their development could receive follow-on support from the other stream in a new development phase. The following table sets out the eligible activity areas where this is envisaged.

Table 5: Demarcation between EAFRD and ESF activities

As noted above, co-ordination will also be necessary for LEADER activities through the SRDP. LEADER actions will be largely undertaken through the Community Planning Partnerships. In applying for ESF funding, the CPPs will be expected to set out clear demarcation of activities and beneficiaries between any LEADER actions and actions funded through the ESF Programme.

Complementarity will regularly also be reviewed through an annual meeting of the respective Managing Authorities. This will produce a report on joint implementation of the different Funds which will be presented on an annual basis to the Programme Monitoring Committee. The PMC will then be able to refine eligibility criteria and project recommendations to take account of supported activity through the SRDP. As part of any mid-term evaluation, the strategic and operational fit between the programmes will be part of formal evaluation.

6.4 The European Fisheries Fund

The regulatory requirements applying to the EAFRD apply similarly to the European Fisheries Fund ( EFF). In Scotland, EFF strategic priorities are set out in the strategy document and the Managing Authority is also the Scottish Government Environment Directorate. Demarcation issues are more limited in the case of the EFF, because of the limited geographical overlap with the ESF programmes. The main parts of the LUPS area where EFF support is available is in the coastal zones of the Borders region.

The main areas where complementarity is evident are set out in the following table.

Table 6: Demarcation between EFF and ESF activities

As with the EAFRD, the two Managing Authorities will meet on an annual basis to review strategic and operational co-ordination and report back to the Programme Monitoring Committee.

6.5 EU Research Funding

The 7 ^th Framework Programme for Research, Technology Development and Demonstration Activities has combined all research-related EU activity into a common framework addressing how research can contribute to achieving the Lisbon Agenda goals. The broad objectives of FP7 have been grouped into four categories: cooperation; ideas; people; and capacities. For each type of objective, there is a specific programme corresponding to the main areas of EU research policy though all are designed to work together to promote and encourage the creation of European poles of (scientific) excellence.

Similarly, the EUCompetitiveness and Innovation Framework Programme ( CIP) also highlights areas identified in the socio-economic analysis for the region, such as competitiveness of enterprises, promotion of innovation and the promotion of energy efficiency. One of the key blocks of activities is the Entrepreneurship and Innovation Programme which fits with support under Priority 2 of the ESF Programme.

Complementarity between the different funding streams will be reviewed with the following instruments:

• ESF project applications will be required to show strategic fit and clear distinction from any relevant projects supported through FP and the CIP; and
• the Managing Authority will report annually to the Programme Monitoring Committee on project activity supported under the research streams to allow the PMC to make more informed decisions on eligibility criteria in the ESF Programme and project recommendations.

6.6 The European Investment Fund and the European Investment Bank

The General Regulation specifies the need for the Operational Programme to discuss how the cohesion-policy funding initiatives of the European Investment Fund and the European Investment Bank will be co-ordinated with the use of Structural Funds. The principal funding stream to which this applies are the JEREMIE and JESSICA Initiatives. JEREMIE provides a mechanism for setting up revolving loan instruments for providing development capital to enterprises while JESSICA provides repayable and recyclable assistance to public-private partnerships for urban renewal and development. However, it is not anticipated that this financing will be used in the ESF Programme.

6.7 The EU Lifelong Learning Programme

The new Lifelong Learning Programme is the successor to the earlier Socrates, Leonardo da Vinci and e-Learning programmes. It will be used to support individuals to study, train and teach abroad and to foster interchange, co-operation and mobility between education and training institutions and systems within the EU.

Students and staff at Colleges and Research Institutions across the region have in the past been able to participate in the previous programmes, building up constructive and useful partnerships. However, this was limited due to the small numbers involved (unlike larger, urban institutions) and distances, making travel time-consuming and expensive. Greater scope for increased participation is available in the new Programme and will complement the activities in Priority 3 of the ESF Programme.

Similarly, actions taken through the ESF Programme - especially through Priority 1 - will be complementary to actions undertaken in the framework of the European Refugee Fund. Complementarity will be likewise be encouraged for the European Fund for Integration, which provides support for integration measures (such as language training) to non- EU nationals undertaking mobility within the EU.