PROGRESS TO DATE ON IMPLEMENTATION OF ERDF & ESF PROGRAMMES PRESENTATION TO ELGIN FUNDRAISING

1. PROGRESS TO DATE ON IMPLEMENTATION OF ERDF & ESF PROGRAMMES PRESENTATION TO ELGIN FUNDRAISING SEMINAR - 01 APRIL 2010 PRESENTER: NIGEL THOMAS ESEP LTD

2. OUTLINE OF PRESENTATION • Implementation of ERDF and ESF Programmes to date • ERDF & ESF Programme Priorities • Decision Making Process • National Rules • Further Information

3. IMPLEMENTATION OF THE ERDF & ESF PROGRAMMES TO DATE

4. FIGURE 1 – ANALYSIS OF ERDF GRANT IMPLEMENTATION Overall Programme

5. OVERVIEW OF AVAILABLE GRANT ALLOCATIONS EUROPEAN REGIONAL DEVELOPMENT FUND (ERDF) An average exchange rate of 1 EURO = £ 0.90 or £ 1 = 1.11 EURO has been used. * A figure of £ 35m has already been ring-fenced although not yet formally approved by ministers for the JESSICA Fund and associated infrastructure project.

6. FIGURE 1 – ANALYSIS OF ESF GRANT IMPLEMENTATION Overall Programme

7. OVERVIEW OF AVAILABLE GRANT ALLOCATIONS EUROPEAN SOCIAL FUND (ESF) • An average exchange rate of 1 EURO = £ 0.90 or £ 1 = 1.11 EURO has been used. • Following a recent commission approval, the Programme allocation for Priority 1 includes the • virement of approx £ 20m from Priority 3

8. Observations on ERDF and ESF Programme Implementation • Overall commitment after 3 application rounds in both funds is good – although performance in different operational priorities is mixed; • A lower than average grant intervention rate for ERDF and ESF commitments to date means that more activity is being bought than was originally envisaged in the financing plan; • The Financial Plan for the Programmes were agreed in Euros. This value may change over time as sterling fluctuates;

9. Observations on ERDF and ESF Programme Implementation • The large number of strategic bids approved – many reacting to government policy developments; • A good geographical spread of resources across the Programme area; • The partnership nature of the Programme – both local partnerships (CPP’s), but collaborations between organisations in different geographical areas; • The level of projects specifically targeted at rural areas • The high concentration on Lisbon earmarked activities.

10. ERDF & ESF PROGRAMME PRIORITIES

11. ERDF Priority 1: Research & Innovation Eligible activities:Support for individual enterprises and research centres • Facilities for undertaking product testing and prototype development • Providing expertise to assist in formation, development and growth of spin-outs • Support for alumni in developing new ideas and enterprises • Due diligence work to identify innovation opportunities within SMEs • Ensuring that SMEs have the capacity and knowledge to exploit innovation • Grant support and investment in SMEs for Concept Definition through to Investor Readiness activities

12. ERDF Priority 1: Research & Innovation Eligible activities: Support for research collaboration • Establishing and strengthening links between businesses and further education • Identifying research activity and assessing potential for commercialisation • Creating knowledge transfer networks (KTN) • Promoting innovation and collaborative working between industry and academia • Raising awareness of the opportunities and benefits to SMEs

13. ERDF Priority 2: Enterprise & Growth Eligible activities: • Access to finance: The provision of risk capital for supporting the creation and growth of the SME base in Scotland • Entrepreneurship support: Resources will be used to support more pre-start activities • Enterprise business processes: Supporting efforts in incorporating e-commerce technologies and embedding environmental sustainability into businesses

14. ERDF Priority 3: Urban Regeneration Eligible activities: • Linking urban areas of need with areas of opportunity: investing in the social and economic infrastructure within disadvantaged communities • Improving the potential capacity of urban areas to develop: To encourage enterprise formation and sustain existing SMEs within the most disadvantaged communities

15. Priority 3 eligible areas: Methodology • Dual methodology - 10 SIMD Local Authorities with highest share of 15% most deprived data zones - 7 Local Authorities with the most severe NEET issues • Annually updated and published before each round • 10% flexibility of spend for neighbouring areas

16. Priority 3 eligible areas: -Clackmannanshire - Dundee City - East Ayrshire - Edinburgh City - Fife - Glasgow City - Inverclyde - North Ayrshire • North Lanarkshire - Renfrewshire • South Lanarkshire - West Dunbartonshire • West Lothian

17. ERDF Priority 4: Rural Development Eligible activities: • Strengthening Rural Industries and Diversification: Improving the competitiveness of traditional, largely primary-based industries and commercial development of key natural resources. • Supporting the Development of Key Shared Services: Addressing fundamental weaknesses in the sources of the competitiveness of rural areas particularly in their basic service provision. 

18. ERDF Priority 4: Rural Development Opportunities for funding: • Marketing of key sectors – tourism etc • Refurbishment / enhancement of local learning centres • Small-scale support for ICT investments enabling distance learning and education outreach in remote communities • Support for initiatives to link enterprises with the training and educational services of further education bodies • Site searching and refurbishment of industrial premises Key areas of focus: • Strengthen engagement with rural communities • Identify sectors that are key to the local area and recognise training / support needs specific to those industries. • Explore partnership approach to address small-scale funding opportunities under ERDF P4

19. Priority 4: Methodology • Methodological approach • Annually updated and published before each round • 10% flexibility of spend for neighbouring areas

20. Priority 4 eligible areas: • Aberdeenshire • Angus - Argyll & Bute (in LUPS area) • Dumfries & Galloway • East Ayrshire • East Lothian • Fife • Moray (in LUPS area) • Perth & Kinross • Scottish Borders • Stirling • South Lanarkshire

21. ESF Priority 1: Progressing into Employment • Target groups: - Hardest-to-reach - Those with multiple deprivations - Young people at risk, especially MCMC - Employers recruiting from these groups • Example activities: - Early engagement/customised support - Work preparation/confidence building, basic skills - Work experience - Intermediate labour market activity

22. ESF Priority 1 eligible areas - Clackmannanshire - Dundee City - East Ayrshire - Edinburgh City - Fife - Glasgow City - Inverclyde - North Ayrshire • North Lanarkshire - Renfrewshire • South Lanarkshire - West Dunbartonshire • West Lothian

23. ESF Priority 2: Progressing through Employment • Support for low-skilled/low-paid workers • Addressing gender imbalances in the workforce • Improving managerial skills • Capacity building of social enterprises

24. ESF Priority 3: Improving access to lifelong learning • Mainstreaming successfully piloted new approaches to lifelong learning and training • Development of new methods of giving access to learning, and learning materials • Skills training for personnel dealing with target groups under Priority 1 • Workplace initiatives to improve access to lifelong learning

25. Decision Making Process

26. All Applications must be completed on The Scottish Government EUROSYS on-line system – can be accessed through ESEP website • Technical & Eligibility Assessment by ESEP Ltd who are the Intermediate Administrative Body (IAB) • Advisory Group Appraisal • Virtual Advisory Groups • Scores Collated • Average Score for each project • Standing Advisory Groups DECISION MAKING PROCESS

27. Monitoring Committee Recommendation • Ministerial Approval DECISION MAKING

28. JUSTIFICATION • Guidance on criteria contained within Notes for Applicants • Nine criteria – high/medium/low • Pay particular attention to high weighting

29. JUSTIFICATION • Strong emphasis on: • Fit with national & local strategies • Partnership • Track record • Horizontal Themes

30. IMPORTANT POINTS • Project threshold - annual £200k eligible cost • Multi-Annual Funding • Ensure your project doesn't duplicate with Leader Programme • Minimum Intervention Rate

31. IMPORTANT POINTS • Match Funding will have to be confirmed no later than 31 March 2011 • Horizontal Themes • Additionality/Added Value • Outcomes/Result in line with Operational Programme

32. NATIONAL RULES

33. NATIONAL RULES • Single set of rules applied consistently and equally to ERDF and ESF during the 2007-2013 Programme period • Activity must be additional and eligible • National Rules specify eligible and ineligible activities

34. NATIONAL RULES • Staff costs are eligible for staff directly involved in the project • Job descriptions should accurately summarise contributing activity • Where staff not 100% on the project - timesheets must be provided • Hourly rate calculation

35. NATIONAL RULES • Other points to note: • In Kind contributions – only for ERDF (provision of land & real estate) • Direct private sector participation is not eligible as match funding

36. NATIONAL RULES • Other points to note: • Responsibility of lead applicant (particularly for partnership projects) • Procurement (contracting) – contracts must be competitively tendered

37. NATIONAL RULES Other points to note: • Purchase of equipment – only eligible for ERDF capital projects. • Overheads – must be additional and directly related to the project • Depreciation

38. NATIONAL RULES • Expenditure must be - Properly incurred and defrayed • Fully vouched via transaction lists • Comprehensive Audit Trail

39. Ineligible costs • Moveable infrastructure • Recoverable VAT • Overheads/‘on-costs’ • Purchase of equipment – ESF/ERDF Revenue Unless additional and directly related to project delivery: • Staff costs • Repairs and maintenance

40. Key points • Additionality – minimum grant necessary • In-kind contributions very limited - Staff etc are not in-kind contributions but may be eligible costs • Revenue – income deducted from eligible costs • Question and Answer section will be published as addendum to National Rules

41. Contact Details ERDF Priority 1 and Priority 4 Rob Gompertz Programme Manager 01383 413141 rgompertz@esep.co.uk ESEP Ltd Forth House Burnside Business Court Inverkeithing, Fife KY11 1NZ ERDF Priority 2 and Priority 3 and ESF Susan Tamburrini Head of Programme Management 0141 241 6150 stamburrini@esep.co.uk ESEP Ltd Centrum Building 38 Queen Street Glasgow G1 3DX www.esep.co.uk