European Funding Programmes operate on a 7 year funding cycle. The latest cycle is the 2014 to 2020 Programme, which officially began on 1st January 2014 although the operational programme was not agreed until well into 2015. EU Funding streams distributed through the UK Government are known as the European Structural & Investment Funds (ESIF). There are other funding streams managed directly from Europe (e.g. Horizon 2020, which funds research & development).
What are the EU Structural & Investment Funds (ESIF)?
The structural funds are designed to increase social and economic prosperity across Europe and reduce disparity between regions, creating a more competitive, prosperous and inclusive Union. The ESIF comprises of four funds –
• the European Regional Development Fund (ERDF),
• the European Social Fund (ESF),
• the European Agricultural Fund for Rural Development (EAFRD),
• and the European Maritime and Fisheries Fund (EMFF).
These funds will deliver the aims of the Europe 2020 Strategy for smart, sustainable and inclusive growth.
In earlier EU Funding Programmes these funds were managed separately. For the 2014 – 2020 Programme these funds will be integrated and aligned to form an EU Growth Programme for the UK.
What is the role of Local Enterprise Partnerships (LEPs)?
In England, the Local Enterprise Partnerships have been invited by the Government to develop an investment strategy for the ESIF allocation in their area. This strategy is aligned to the Strategic Economic Plan developed by each LEP, and sets out how the ESIF monies will be used to encourage sustainable, inclusive growth. These investment strategies were approved in 2014 and due to a re-calculation of the Euro exchange rate in late 2015 LEPs are currently revising their strategies. These revisions need to be finalised by end February 2016. The Government will then combine all 39 strategies to develop a national programme.
Although LEPs are responsible for developing the ESIF investment strategies for their area, they will neither hold nor be accountable for the actual funds. The responsibility for managing funds will rest with Local Growth Teams representing the UK Government departments who are the Managing Authority for each type of funding, with the Department for Business, Innovation & Skills (BIS) leading on initial negotiations with LEPs. The government departments responsible for the EU funds are:
• Communities & Local Government (DCLG) for ERDF,
• Department of Work and Pensions (DWP) for ESF; and
• Department for Environment, Food & Rural Affairs (DEFRA) for EAFRD.
What are the allocations by LEP area?
As mentioned above each LEP is a functional economic area. In the case of the South East Midlands LEP (SEMLEP) this represents a £39 billion economy, 67,000 businesses and 1.8 million population. It has a complex geography, covering 11 local authority areas – 4 unitary councils and 7 district councils.
Bedford Borough, Central Bedfordshire, Luton, Milton Keynes, Aylesbury Vale, Cherwell, South Northamptonshire, Daventry, Northampton Borough, Kettering and Corby. The SEMLEP area overlaps with three other LEP areas – Northamptonshire Enterprise Partnership (NEP), Buckinghamshire Thames Valley LEP (BTVLEP) and Oxfordshire LEP.
Each LEP received a notional ESIF allocation in Euros. The original SEMLEP allocation equated to £76.46m. After the recalibration this has reduced to £67m. The ESIF allocations and strategies for all LEPs can be found on:
What about match funding?
Any project to be funded must provide at least 50% of the funding, known as match funding. Sources of match funding could be the applicant’s own funds, other funding streams such as the Local Growth Fund, or other public or private sector funding. Only ERDF and small amounts of EAFRD can be used to fund capital projects.
What are Opt-ins?
Opt-in organisations are national bodies such as the Skills Funding Agency who offer to deliver agreed, locally tailored activities that reflect the requirements of the LEP and their own organisation’s main responsibilities. They will draw down ESIF monies from the LEP allocation and provide the match funding needed from their own national funding programmes. SEMLEP has entered into agreements with the Skills Funding Agency to provide skills for those in work and the unemployed; with the DWP to provide support the unemployed and disadvantaged families; and with the Big Lottery for community led projects.
What about direct bidding?
All of the ERDF and EAFRD allocations for SEMLEP are available for direct bidding, as well as some provision for direct bidding for ESF funds. The application process is in two stages application through open bidding rounds managed by the Government Growth Teams. Applicants will submit a project outline to Government including details of project objectives and activities, any proposed partnership, information on outputs and costs, and sources of match funding. Although the three ESIF funds were originally supposed to be aligned, applications for ERDF, ESF and EAFRD are being released separately by the appropriate Managing Authority. The appropriate Government department will assess the project for legal compliance, fit with EU funding requirements and value for money. The LEP will assess the project for strategic fit with local needs. If approved by both parties, the project will then
be asked to complete a full business case for funding, which will be appraised by Government, and resubmitted to the LEP for final sign off.
What about smaller, local projects for rural areas?
There is a type of ESIF project called Community Led Local Development (CLLD) which allows an urban or rural community of between 10,000 and 150,000 people to establish a local fund which involves people in developing and delivering activities which have socioeconomic outcomes. The minimum project size is 2million Euros and applications will be prioritised in areas identified as being in the 20% most deprived areas by reference to the Index of Multiple Deprivation (2010). This model is based on the LEADER rural programme.
The ESIF programme does have a small funding pot which the EU commission calls EAFRD although DEFRA who are the managing authority call this funding their growth programme.
In addition DEFRA also manage the LEADER programme which is now live. This funding is ideally suited for smaller rural projects and like CLLD is aligned for a targeted geographical area.
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