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5. CO-ORDINATION WITH OTHER FUNDS

Co-ordination of the Structural Funds with other relevant funding streams is a regulatory requirement, but it is given greater importance in the current programming period. Compared to previous funding rounds, the scale of funding in the Highlands & Islands is significantly reduced, making it more critical that the value of the 2007-13 Structural Funds are enhanced by ensuring they work closely with other sources of funding. Similarly, the scope of eligibility in the current programming round is more targeted than in previous rounds, giving greater opportunities for Structural Funds to work in combination with other, similarly targeted policies.

In this context, there are several relevant funding streams. This chapter discusses how the ESF Programme will work closely with:

• the European Regional Development Fund;
• the European Territorial Co-operation Objective; and
• EU support for agriculture and fisheries.

5.1 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, 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 Convergence Objective of the Structural Funds, covering the same eligible area. The experience of the previous programming period in co-ordinating ESF and ERDF funding (as discussed in Section 3.2 above) has fed into developing the approach for the current 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 not only co-ordination takes places systematically, but that it is monitored and assessed on a regular basis.

The main co-ordination mechanism will be through the Programme Monitoring Committees overseeing the ERDF and the ESF programmes for the Highlands & Islands. The arrangements for the ERDF Programme Monitoring Committee ( PMC) are discussed in detail in. While the two Committees are technically separate, there would be considerable advantage in a common membership to assist co-ordination of use of the funds. Annual reporting on how ERDF and ESF is being used jointly by an ad-hoc sub-committee composed of ERDF and ESF programme representatives, to be established by the Managing Authority for both programmes. These annual reports - taking the form of papers to be discussed at PMC meetings - would be the basis for a review of the procedures for ensuring funding co-ordination and the targeting of funding on eligible activities. Decisions on the basis of the sub-committee recommendations would have to be taken jointly by the two PMCs.

As part of this annual reporting, the use of the funding flexibility allowed by the General Regulation will also be reviewed. Under the Article, up to 10% of total ESF programme resources can be spend on ERDF-related activities. This will enable projects to avoid unnecessary applications on projects where such activities are likely to be a small proportion of total project funding. 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' activities 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 Highlands & Islands. Joint awards of funding under Priority 1 of the ESF Programme and Priority 2 of the ERDF programme will be made to local partnerships (in line with the delivery arrangements for the priorities, as discussed in detail in Section 5.1). 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. As Section 5.1 describes, a selection of local partnerships, such as Community Planning Partnerships, will be given multi-year packages of ESF and ERDF funding to support eligible activities set out in the Structural Funds Outcome Agreements, prepared by the partnerships and updated and monitoring on annual basis. The Agreements would identify the specific activities to be funded by the ESF contribution and would also outline how the funding would be used in conjunction with the ERDF contribution.

In addition, Priority 2 of the ESF Programme has been designed to complement Priority 1 of the ERDF programme. The focus of Priority 2 on the skills needs of SME managers and those wanting to set up, or who have just set up, new enterprises as well as any skills deficits connected to the RTD/innovation capacity of enterprises will complement the support of Priority 1 in the ERDF programme on the enterprise development needs of SMEs, new enterprises and entrepreneurs and the promotion of RTD and innovation activity. This kind of complementary activity will be critical in ensuring that activity in the ESF Programme does not result in simple overheating of an already tightening regional labour market.

5.2 Territorial Co-operation Objective

There are a number of programmes in the different strands of the Territorial Co-operation Objective which cover part of the Highlands & Islands area. Activity supported under these Co-operation programmes will be co-ordinated, where appropriate, with the ESF Programme.

In the transnational co-operation strand, there are two relevant programmes. The Northern Periphery programme covers the Highlands & Islands. The programme's partners include Finland, Ireland and Sweden within the EU and Norway Iceland outwith. The programme's thematic priorities mesh with the eligible activities set out under Priority 2 in the ESF Programme. Similarly, the area is eligible under the North Sea, North West Europe and Atlantic Coast programmes. Priorities in these programmes relate to Priority 2 as well. In all cases, demarcation of eligible activities have been made by the Managing Authority.

The transnational programmes are continuations of programmes from the 2000-06 period and will build on their experience. Under the cross-border co-operation strand, the Highlands & Islands area will be eligible for support from a programme with partners in Northern Ireland and Ireland. Its key themes fit with Priority 2 of the ESF Programme.

As Managing Authority, the Executive will identify opportunities for projects that have received funding from one programme to have a later stage of their development funded under another programme, if appropriate or, vice versa, where co-operation projects suggest a way forward, solutions might be mainstreamed into the Highlands & Islands Programme.

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.

5.3 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 Executive Environment and Rural Affairs Department.

The ESF Programme and the Scottish Rural Development Plan ( SRDP) have been developed in parallel by the Scottish Executive 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.

Complementarity will be regularly reviewed through an annual meeting of the two Managing Authorities. This will produce a report on joint implementation of the two Funds which will be presented on an annual basis to the PMC. As part of the mid-term evaluation, the strategic and operational fit between the two programmes will be part of formal evaluation.

5.4 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 Executive Environment and Rural Affairs Department. Demarcation issues are more limited in the case of the EFF, because of the limited geographical overlap with the ERDF programmes. The main parts of the Highlands & Islands area where EFF support is available is largely concentrated on the west coast and the islands.

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

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

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