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7 FINDINGS: DELIVERY
The section reviews the findings with respect to proposals for delivering the new Programmes as set out in Questions 12 and 13, specifically covering the operation of competitive bidding through the traditional 'challenge-fund' approach and the role of Community Planning Partnerships.
Q12. How can the challenge fund approach be improved to make it more effective in delivering outcomes and more efficient in operation?
Structural Funds have been delivered through a competitive bidding process in previous programmes. In adapting this selection approach to future programmes, Question 12 asked whether there was scope for improving the way the so-called 'challenge fund' approach can be applied. Numerous comments were made by respondents on different aspects of the challenge fund approach.
There was strong support amongst respondents for the competitive challenge funding model (17). Many welcomed the retention of this approach and some thought that it should be applied to all funding in the Programmes. Many felt was already an effective model, is widely understood and admired throughout the EU and ensures democratic accountability. "Fine tuning rather than overhaul" is how some respondents put it.
However, most respondents accepted that some improvement would be beneficial, although their suggestions were varied and covered a number of separate issues.
Intermediate Administration Bodies
The change from the Programme Management Executives to the Intermediate Administration Bodies in the new period generated a number of remarks and suggestions. Two explicitly welcomed the reduction in the number of IABs which they felt would bring greater efficiency and a reduction in the administration burden. However, some local dimension needs to be retained.
One respondent felt that the IAB role should be expanded to include support in project development and management. Two agreed there was a need to give more support to projects in the design stage. A further two thought that the IABs could have an important role in joining together similar/complementary projects.
There was a call for more frequent monitoring of projects, and more clear and standardised reporting linked to the claims cycle. In this context, the respective roles of the IAB and the Managing Authority in the claims process must be made absolutely clear (as argued by one respondent). Another respondent suggested that there should be a closer working relationship between the projects and the new IABs to encourage effective monitoring and evaluation. This could take the from of regular visits by case officers to provide input to the process and get a clear understanding and awareness of issues and obstacles as they occur. This could contribute to greater efficiency in the operation of the programmes.
Intermediate Delivery Bodies
Many respondents took the opportunity to comment on the proposed use of the Intermediate Delivery Bodies under different Questions. The responses are summarised here, apart from the IDB status proposed for South of Scotland partners under ERDF Priority 3, which is discussed under Question 15
A number of concerns were raised about the use of IDBs. Seven felt that commissioning may not necessarily be the most effective delivery method within what was expected to be the final Structural Funds programmes for the region. One respondent suggested that the use of IDBs such as Scottish Enterprise should be on a pilot basis subject to review by the partners. There were a number of concerns over the transparency of allocating funds directly to IDBs and the additionality of projects operated under this model. Many questioned the need to change the current model and asked for more clarification about the role and accountability of IDBs. It was also suggested that, if Scottish Enterprise were to bid into the challenge fund element of the programme in addition to their allocation, it should not be lead applicant.
Overall, seven were concerned about the designation of Scottish Enterprise as an IDB under ERDF Priority 1 and some requested clarification over the amount of funding it would be allocated. Five were concerned about the pursuit of 'region-wide' projects by Scottish Enterprise in areas where there was already a dynamic private sector and a high level of innovation and RDT activity. Many respondents, although not completely opposed to the use of Scottish Enterprise, would like to see more access in Priority 1 for other bodies. Some respondents supported the use of Scottish Enterprise as an IDB but thought it important to ensure strict commissioning arrangements to ensure additionality.
Decision-making structures
Five respondents commented on the decision-making structures for the new Programmes, supporting the continued role for peer review/advisory groups and the Programme Implementing/Management Committees which they felt fed in the practical experience and skills of project practitioners into the process.
One decision-model model was developed by COSLA with input from the West of Scotland European Consortium ( WOSEC) and the East of Scotland European Consortium ( ESEC). It outlined a variation on the current system, but with a single Programme Monitoring Committee to consider the distribution of all monies throughout Lowlands and Uplands Scotland, including those under commissioning arrangements. There would be representation on the PMC from each of the major sub-regions with representation from sectors stakeholders such as Scottish Enterprise, the further and higher education sector and the voluntary sector. Regional fora from each of the three sub-regions would provide more local advice to the PMC. The model also proposes the continued use of a Programme Implementation/Management Committees and advisory groups for each of the proposed priorities. This model was explicitly supported by eight respondents in total.
Thirteen respondents from the South of Scotland also supported a single PMC and the use of advisory structures. Specifically, they would like to see the establishment of a South of Scotland Advisory Committee to provide feedback on applications, advice on progress with the implementation of the programme and support the development of policies and procedures. They also thought that the South of Scotland Alliance should be represented on the national Programme Monitoring and Management Committees established to oversee the operation of the programmes.
Partnership
A few respondents asked about the role of partnerships in the future Programmes. The potential requirement for strategic partnerships in project bidding was a concern for one respondent as they felt that an enforced partnership principle was not viable - partnerships should not be required, only encouraged. There was a danger this would lead to domination of large organisations at the expense of innovative providers, according to two respondents. The cost of assembling partnerships could be a disincentive.
One respondent was wary of adopting the EQUAL model without careful consideration and analysis of the costs, efficiencies and benefits of that model. Another agree that the EQUAL partnership model had not been independently assessed and suggested that it was seen as time-consuming and not good value for money. On the contrary, one respondent felt that the a partnership-based approach to projects could be successful and one supported an examination of the EQUAL model.
Minimum project size
Partners were asked whether the setting of a minimum project size should be adopted as an eligibility criteria in the Programmes. Eleven respondents opposed, had concerns about or were cautious over the possibility of setting a minimum project size. Projects should be viewed on their merits and ability to deliver rather than the size. It was felt by one respondent that minimum project sizes could prejudice the voluntary sector and projects supporting the 'hardest to reach' or low incidence disadvantaged groups.
Two respondents recommended a minimum project size. One thought that this should to be set at £500,000 for ERDF and £100,000 for ESF in order to ensure that only projects which are strategic, region wide in scope and economically viable are supported. Another supported a minimum project scale of £100,000, but stressed that it was important to allow small projects to cluster together to meet this threshold, particularly across different geographical areas.
Application/appraisal /selection system
Peer group appraisal of projects through advisory groups should be maintained in some form (12 respondents), although the process could be streamlined. It was felt that this process demonstrated true partnership and transparency and provided good value for money. One respondent suggested that advisory group members should receive training.
However, there was scope for improving the appraisal system. Three respondents argued that assessment system should look beyond 'well-crafted' applications to consider real capability of both project and applicant to deliver quality outcomes. Five argued that information on previous performance, track record in delivery and capacity, sustainability and exit strategies for funded activities should all be considered into the assessment process. One respondent agreed that there should be more weight in the selection procedure on experience in running projects to minimise N+2 risks and project performance.
Ten respondents mentioned the importance of considering local and regional strategies in project selection. One respondent also emphasised the need to build local priorities and knowledge into the appraisal and management procedures.
A number of respondents (3) suggested that the application system be sped up and simplified. It was felt by some that applications were too complex and resource intensive to complete and one thought it would be helpful if one application form covered all projects by a single organisation.
On the frequency of application rounds, four argued that these should not be significantly reduced. One respondent felt that a reduction in the number of rounds would only be acceptable if there was an annual review of progress and a mechanism to reallocate unused funds. A 'rolling programme' was supported by a four respondents.
A multi-annual approach to project funding was welcomed by two respondents, although this should not be for a set number of years. Projects should be funded on a basis of their ability to demonstrate progression in terms of delivery of outcomes and single-year projects continue to be allowed.
Substantial support (11) was given for a two-stage application process, with the first stage an. It was felt that this would reduce burden on applicants whose proposals do not fit. One respondent felt that an initial expression of interest would allow the IAB to facilitate a 'joining up' of organisations with similar ideas, who could then jointly submit a formal application in partnership for the second stage of the process.
Executive response
The Executive is pleased that partners recognise that the current system works well but could be improved to the benefit of those running projects and to deliver high-value projects to the region. The consultation proposals suggested a number of ways in which the challenge-fund approach could be adapted to an environment of significantly reduced funding. The proposals were set out with a view to enhancing the strategic quality of projects, reducing the administrative burdens to applicants and project managers and ensuring that the financial and audit obligations of EU funding continue to be met.
As expressed by some respondents, the aims is to adapt not overhaul the current system. In responding to the reduced funding, we are keen to preserve the key features of the existing system but find ways of improving it for all involved in the management and delivery of the Funds. As a result, challenge funding will continue to be the foundation of the new system and the bulk of funding will continue to be delivered through competitive bidding.
Intermediate Administration Bodies
The new IABs will carry out similar duties to the current Programme Management Executives in the new programmes. There are no proposals to extend or limit these duties, only the way in which these bodies are funded and selected. With the ineligibility of the voluntary management subscription funding model for the 2007-2013 period, the Executive will now fund the match-funding element of these bodies directly. As a result, and in order to achieve best value in selecting a fewer number of administration bodies and in keeping with Executive procurement rules, the Executive tendered for these services for a three-year period. At the end of 2006, a contract was awarded to ESEP Ltd to be the IAB for the two Programmes for Lowlands and Uplands Scotland for the three-year period in question.
Intermediate Delivery Bodies
The Executive intends to make limited, but effective use of IDBs. The bodies will deliver clearly-defined strategic projects that will make a significant difference to achieving the goals of the Programme. Allocations for IDBs for the delivery of these projects will be set by the Executive at a later stage when the final shape of the Programmes is clear from the negotiations with the Commission. Individual projects will need approval by the Programme Monitoring Committee. The PMC will also receive regular reports on project progress. Achieving financial and performance targets will be essential for the maintenance of the funding for the IDBs.
As proposed, the following IDBs will be selected:
- For the new Priority 1 (research and innovation): Scottish Enterprise.
- For the newly-numbered Priority 4 (rural development): the South of Scotland Alliance acting on behalf of partners in Dumfries & Galloway and the Scottish Borders.
Several concerns were made about the role of Scottish Enterprise. In delivering the research and innovation goals of the new Priority 1, it is a primary agency in delivering Lisbon objectives and key Programme activity. This role and the potential for implementing major strategic projects for benefit to the region as a whole provides a compelling case for its selection. Close monitoring of spend, performance and additionality will be conducted by the Managing Authority. A substantial share of funding under Priority 1 would remain open to bids from other bodies.
The role of South of Scotland partners as an IDB is discussed under Question 15.
The IDB funding will not be block funding, but designated for specific, identified projects. Consequently, other projects can be brought forward by the IDB in the challenge funding, to be assessed in competition with all other project bids.
Decision-making structures
The Executive does not believe that the current decision-making structures need substantial revision. Advisory groups and the principle peer review will remain in place. A single Programme Monitoring Committee is proposed for the region as an effective way to co-ordinate Structural Funds spending in the region with strong regional and sectoral representation. The Objective 3 PMC offers a good model on which to build. Other subsidiary committees can be established by the PMC as required.
Partnership
Partnership has been lauded at home and abroad as one of the chief merits of the 'Scottish model'. The Executive would like to see partnership develop in project design and delivery and will be exploring ways of encouraging the formation of effective, natural partnerships. This will not be a requirement of the future Programmes, but it will be encouraged where appropriate and complementary activity is clear between different applications.
Minimum project size
The Executive believes that a minimum project threshold across all priorities for the two Lowlands and Uplands Scotland Programmes will improve their administration and impact. A single threshold would be set at an annualised level of eligible project costs of £200,000. Such a threshold will encourage the development of more legacy-based and strategic projects and reduce the costs of administering separate projects for many partners. Where individual organisations or different applicants have related project bids, they can be encouraged to create single projects bids where appropriate as part of the two-stage application process discussed below. Such an approach would also manage expectations for project bidders in an environment of greatly reduced funding.
A project threshold should not unfairly prejudice any sector or part of the region. It will be an important task of the IAB to work with projects advising how suitable project bids can be put together.
Application/appraisal /selection system
A number of suggestions were made on improvements to competitive bidding which should be introduced into the new Programmes.
Annual rounds will be retained, but their timing will be co-ordinated across the Programmes. With reduced funding, there is not a strong argument for awards to be made more than once a year. However, we wish to encourage multi-annual projects to come forward to allow projects greater security of funding, although single-year projects will continue to be eligible.
To improve coherence and concentration, there is greater scope for more co-ordinated applications by projects that span different priorities and Programmes in the region. This will still involve separate applications, but efforts will be made to streamline decision procedures to provide co-ordinated decisions on funding packages to projects that straddle different parts of the Programmes. More details of this will be set out in the revised Operational Programmes and the guidelines for application.
A two-stage application process will be introduced in line with stakeholder suggestions. In the initial outline sage, bids will be required to provide project descriptions and award request. This will allow an initial filtering of bids as well as the development of partnerships and complementary bids where appropriate. A standardised application form will be used across Scotland as far as possible.
Lastly, the appraisal criteria will be revisited to ensure that greater weight is given to project fit with national, regional and local strategies and the track record of organisations in managing and delivering Structural Funds.
Q13. What would be the most effective approach to using Community Planning Partnerships and other local partnerships for the delivery of elements of the programme?
The consultation set out the potential for the Community Planning Partnerships to use funding through Priority 1 ESF and Priority 2 ERDF and that should an approach could be explored on a pilot basis.
Support for CPPs was strong. Forty-nine of those responding supported the use of CPPs or other local delivery partnerships, welcoming the fact that this brought a local dimension to the implementation of the Structural Funds. Thirteen supported the use of CPPs but had some concerns or recommendations regarding their use. Only five respondents did not support the use of CPPs or had significant concerns over their use.
However, a significant number of those who responded (18) supported the use of CPPs and cautioned that the scale, capacity, maturity and expertise of CPPs varied across Scotland with some more experienced than others in delivering activities. A number of respondents (6) were concerned that voluntary organisations could find it difficult to access funds from the CPPs and would like to ensure that voluntary partners had a strategic role, rather than simply a delivery one, within the CPPs. It was thought by some of these respondents that the CPPs had to develop more simplified processes and systems as the CPP procurement processes can be complex and work to the exclusion of smaller organisations.
Some respondents were also concerned about the additionality of funding provided to the CPPs. Six stressed the need for CPPs to produce a clear strategy for the effective deployment of Structural Funds outlining how they will complement other core funding from the Community Regeneration Fund and other sources. This should outline clear outputs, impacts and results for the full range of priorities they will be delivering. The Managing Authority, the IAB and other local partnerships should be engaged in the development of these strategies. Six respondents supported EQUAL Local Development Partnerships as a possible model.
Some respondents suggested that role of the CPPs could be extended to include ERDF Priority 3 (3) and ESF Priority 3 (1). Two suggested that all ERDF Priority 2 and ESF Priority 1 funds be channelled through CPPs. Four respondents also suggested that they could have a role in verifying the fit between project applications and local strategies, community plans and Regeneration Outcome Agreements.
Some respondent had concerns that the CPPs chosen as pilot CPPs would also have access to the challenge funding element of the programme saying that this would unfairly disadvantage other areas.
There were a number of points raised in connection with the pilot selection process with a significant number of respondents seeking clarification of the process. A transparent selection process was important for a number of respondents (5) who thought that pilot CPPs should be identified through a formal invitation process open to all CPPs. This selection process should consider track record and effectiveness in delivery, experience in budget management and the ability to demonstrate clear additionality that achieves strategic outcomes.
Three respondents would like to have seen an earlier and stronger commitment to the use of CPPs with some concerned that the three-year pilot would delay the effective use of CPPs until the second half of the programme period. It was felt by two respondents that CPPs should be limited to a smaller pilot programme using a small amount of funding (0.5% and 10% were both suggested) and be limited to small, innovative projects of less than £10,000.
Executive response
The Executive welcomes the positive response to the proposal to make use of the CPPs to deliver social inclusion/regeneration funding in the new Programmes. The CPPs would be a new mechanism for delivering Structural Funds, so the approach should be employed carefully. Their use will remain limited to a share of the funding in ESF Priority 1 and the newly-designated ERDF Priority 3 to complement their key role in delivering social inclusion and regeneration goals at a local level.
As the approach is untested, it remains prudent to test the funding for a pilot period and only for a share of the funding under these two priorities. This allocation will be decided before the formal start of the Programmes, but it will not exceed half of the funding within the priorities. This pot will be open to competitive bidding for all CPPs in the eligible areas for the priorities (as described in Question 14). This will enable bids to be assessed on the quality, the need of the area and the capacity of the delivering organisations. Details on the criteria for the bids and the appraisal and selection procedures will be provided when the allocations are announced. Evaluation will take place after a two-year pilot phase at which point, decisions on how to proceed for the remainder of the period can be taken.
It is essential that CPPs engage with relevant partners - if one of the attractions of using CPPs is the role of partnership, it is important that partnership is genuine and reflects local interests. In making awards to CPPs, it will be stipulated that local partnerships should be inclusive and that this is clearly demonstrated in project selection. The CPPs should also take account of local support through other EU funding streams (such as Leader+) and demonstrate complementarity in their bids.
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