The Third Sector in Wales and European Structural Funds Programmes post-2013

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1 The Third Sector in Wales and European Structural Funds Programmes post-2013 Introduction Over 96.4 million of EU funds have been committed to 35 projects led by the third sector under the Structural Funds programmes Through volunteer time and other forms of match funding, this will generate a total investment of 176.1m. This will help 76,600 individuals, including 18,800 to gain qualifications, 7,100 into work and create almost 700 jobs. The third sector is also involved in the delivery of activities of EU projects led by public and private sectors, having won over 77.9m worth of contracts under the programmes' procurement arrangements. The sector is involved in delivering a wide range of ESF and ERDF projects, including providing specialist, innovative approaches to helping the most disadvantaged to overcome barriers to employment, engaging with NEETs and raising the aspirations of young people, supporting the advancement of women in employment, taking forward the digital inclusion agenda, building walking and cycling route networks, restoring community buildings, and developing the social economy in Wales. The third sector European Forum (3-SEF), facilitated by WCVA s third sector European team (3-SET) is a network of over 660 third sector EU project sponsors and contract delivery organisations. This position paper presents key issues for the third sector in moving forward into any successor Structural Funds programmes in Wales post It has been drafted in consultation with 3-SEF and is endorsed by the network. Summary of recommendations 1. The Welsh Government is asked to ensure that the third sector is fully engaged in the decision making process leading up to the implementation of any new programmes post WCVA endorses the need for continued Technical Assistance funding to support and facilitate the third sector s access to European Structural Funds post-2013, including an allocation of funding to third sector, and other, providers of support % of the total funds available should be committed at the start of the new programmes to enable projects to hit the ground running, and to avoid the delays experienced at the start of the Convergence programme. 4. WCVA endorses the integrated approach that is being taken by the Welsh Government to the planning and delivery of the Structural Funds and Rural 1

2 Development programmes in Wales, to ensure a balanced investment across urban and rural areas, and to standardise systems and processes where appropriate. 5. The Welsh Government is asked to encourage and enable project sponsor s to use the most appropriate approach, either procurement or grants, depending on the scale, level and type of activity. 6. It is recommended that European Social funding is ring-fenced for innovative actions, possibly in the form of a global grant programme, utilising the facility to make lump sum grant payments of up to 50,000 Euro s, and with a high intervention rate applied to ensure that the ability to source match funding is not a barrier to participation. The potential to test and then mainstream successful social innovation using ESF should be explored further. 7. It is recommended that an ERDF regenerating/empowering communities/local development priority targeted at the areas of greatest needs closely aligned to ESF social inclusion and employment priorities would be the best route to develop social capital and empower communities with new skills and employment prospects and as a vehicle to promote community regeneration. 8. The Welsh Government should promote, but not centrally determine, innovative actions within the programme priorities for working with NEETs, which are responsive to individual and local needs. 9. The Welsh Government is asked to ensure not only access to financial instruments but also a full suite of investment, grant, start up, business and intellectual support is made available to enterprising third sector organisations and social enterprises. 10. The need for a proportionate approach to be taken to State Aid is emphasised as in the main, third sector activity does not affect trade between Member States and in most cases, warrants a lighter touch approach. Timely advice on State Aid from WEFO to project sponsors is crucial to avoid delays in project implementation. 11. It is recommended that the Welsh Government maintains its commitment to advance payments to provide cash flow for third sector project sponsors and that the advance payments facility should also be available to third sector organisations that are delivering contracts on behalf of public sector project sponsors. 12. It is vital that volunteer time remains eligible as a source of in-kind match funding in any new programme post-2013 and that advance payments remain available to third sector organisations, both as project sponsors and contract delivery organisations for projects led by the public sector. 13. The role of the third sector and especially community groups should be central to proposals for implementing the EU2020 climate change targets in Wales. It should include financial instruments for community led micro and small scale renewable energy generation schemes and a specific green jobs strand for Intermediate Labour Market (ILM) activity. 14. The Welsh Government should scope opportunities to improve flexibility in EU funding rules to incentivise, rather than hinder, sustainable financial models such as loan and legacy funding. 2

3 Ensure full engagement of the third sector in the design, management and implementation of European Structural Funds Programmes post-2013 The engagement of the third sector in partnership arrangements has been a distinctive feature of the and Welsh Structural Funds programmes, which is recognized as good practice across the EU. The Welsh Government is asked to ensure that the third sector is fully engaged in the decision making process leading up to the implementation of any new programmes post The sector welcomes the invitation of WCVA to the Post-2013 Partnership Forum and looks forward to the continuing pro-active engagement of the third sector by the Welsh Government on the issue of European Structural Funds Programmes post WCVA endorses the need for continued Technical Assistance funding to support and facilitate the third sector s access to European Structural Funds post-2013, including an allocation of funding to third sector, and other, providers of support. Programme design Given the long lead-in time experienced in moving from project development to delivery in the programmes, it is recommended that 80% of the total funds available should be committed up front, at the start ofthe programmes to enable projects to hit the ground running and to avoid the delays experienced at the start of the Convergence programme. Allowing for considerable lead-in times for capital ERDF projects is particularly important to enable outputs to be achieved within the timescale. WCVA endorses the integrated approach that is being taken by the Welsh Government to the planning and delivery of the Structural Funds and Rural Development programmes in Wales, aiming to bring greater coherence to ensure a balanced investment across urban and rural areas, and to standardise systems and processes where appropriate. Contracts versus grants An amendment to the current ESF programme in October 2010 permitted schemes to competitively award grants, rather than contracts for project activity. The Welsh Government is asked to encourage and enable project sponsor s to use the most appropriate approach, either procurement or grants, depending on the scale, level and type of activity. For example, large scale procurement is appropriate for road and transport schemes, whereas grants are more appropriate than contracts for small scale, local ESF interventions that are designed to provide tailored solutions for participants with complex needs. Where procurement is deemed to be the most appropriate approach, care should be taken to ensure that processes respect the overall aim of the programme to raise economic wealth in Wales and that third sector organisations are not disadvantaged. Social clauses should be included where possible to ensure that local businesses benefit from contracting opportunities and to promote an inclusive approach to the provision of goods and services. Funding social innovation Under the Communication on a European Platform against Poverty and Social Exclusion and the Innovation Union there is an increased emphasis on social innovation in the context o f the Europe 2020 strategy, and how it can be a powerful tool to guide the structural reforms that will be needed to implement the Europe 2020 vision for smart, sustainable and inclusive growth. The ESF can provide funding to take risks and test innovative actions, and has done so successfully in both the Objective One and Convergence programmes in Wales through 3

4 local key funds and schemes such as WCVA s Social Risk Fund and Engagement Gateway. The Fifth Cohesion Report proposed that Member States could ring-fence funding for specific target groups or experimental/innovative approaches, possibly in the form of global grants. The inclusion of global grants in any post-2013 programmes is endorsed as flexible and accessible funding encourages citizen led, bottom-up solutions to local and regional issues. The Welsh National Rules on the Eligibility of Expenditure for the programmes permit lump sum payments of up to 50,000 Euro s in grants to projects (section 4.4.8). It is recommended that this facility is used to simplify access to Structural Funds for lower scale activity, in order to reduce bureaucracy for both the project sponsor and deliverer. It is recommended that European Social funding is ring-fenced for innovative actions, possibly in the form of a global grant programme, utilising the facility to make lump sum grant payments of up to 50,000 Euro s, and with a high intervention rate applied to ensure that the ability to source match funding is not a barrier to participation. The potential to test and then mainstream successful social innovation using ESF should be explored further. A return to a more community based regeneration / social inclusion approach In order for Wales to fulfil the Europe 2020 priorities of creating a more equal and just society and a reduction in poverty, as set out by the European Platform against poverty and social inclusion (one of the seven flagship initiatives of the Europe 2020 Strategy), any future ESF Programmes must have a dedicated priority to combat social exclusion and poverty that is not solely focused on employment. This priority must allow for the development of community led innovative interventions that are responsive to the needs of those hardest-to-help, where better co-ordinated and easier cross-financing between the ESF and ERDF is possible. The Communication on a European Platform against Poverty and Social Exclusion refers to the ESF as a key financial tool for supporting employment and social inclusion and for testing innovative actions. It also states that the achievement of the social inclusion objectives of the EU will [ ] rely on the current and future operation and design of the ERDF. We believe this is the only way to tackle of poverty and social exclusion in a holistic manner to meet the Europe 2020 priorities. An increased focus on poverty and social exclusion must be accompanied by outcomes that focus not only on jobs but more importantly on progression towards employment, including soft outcomes and volunteering. Project sponsors and contract delivery organisations must be given incentives that reward outcomes appropriate to the most disadvantaged, in order to avoid the cherry picking or creaming and parking of those hardest-to-help in favour of interventions focussing on those closest to the labour market. The ERDF programmes should in the same vein include support for communities across Wales, with a particular focus on the areas of greatest need. Coherence and integration between ERDF and ESF interventions should be promoted, combining the existing local physical infrastructure with relevant support structures as a vehicle for community economic development and regeneration. We believe that an ERDF regenerating/empowering communities/local development priority targeted at the areas of greatest need and closely aligned to ESF social inclusion and employment priorities would be the best route to develop social capital and empower communities with new skills and employment prospects. Using the third sector to successfully engage the hardest to reach young people and NEETs 4

5 The third sector s role in working with young people, especially those hardest to reach and those not in education, employment of training (NEET), should be recognised in relation to achieving the EU2020 target of reducing early school leaving and working with NEETs. The Welsh Government should promote, but not centrally determine, innovative actions within the programme priorities for working with NEETs, which are responsive to individual and local needs. Supporting the growth of charitable trading and social enterprises including through financial instruments There is a need to broaden the third sector s access to financial instruments through any new programmes post The current instruments are targeted predominantly at the private and public sector (JESSICA and JEREMIE) and are not appropriate to meet the growing needs of the third sector. Innovative financial instruments that meet the particular needs of the sector, especially as a growing emphasis is placed on payment by results, need to be brought to market and any new funding post-2013 would be an appropriate vehicle to deliver these instruments. The Welsh Government is asked to ensure not only access to financial instruments but a full suite of investment, grant, start up, business and intellectual support is made available to enterprising third sector organisations and social enterprises. The effect would be twofold: to increase jobs and prosperity but also enable third sector organisations to become more self-sufficient and less reliant on grant funding and donations. Taking a more proportionate approach to State Aid The thinking following the European Commission s Communication on the reform of State Aid rules on services of general economic interest (SGEI), published in April 2010, is that the review of the State Aid framework which expires in November 2011 should focus on clarification on the application of key State Aid concepts by Member States, and the principles of taking a diversified and proportionate approach to make the degree of State Aid scrutiny dependent on the nature and scope of services. The Communication flags up the need to simplify the application of rules for certain types of small scale public services of a local nature with a limited impact on trade between Member States. A need for a more proportionate approach to State Aid be taken is emphasised as in the main, third sector activity does not affect trade between Member States and in most cases, warrants a lighter touch approach. Timely advice on State Aid from WEFO to project sponsors is crucial to avoid delays in project implementation. Advance payments to third sector sponsors and contractors WCVA recognises that the Welsh Government s Funding Code of Practice has been adhered to in the programmes in order to facilitate advance payments to provide cash flow to third sector project sponsors. However the advance payments facility should also be available to third sector organisations that are joint sponsors led by public sector project sponsors, as well as to those delivering EU funded contracts on behalf of public sector project sponsors. Recognising the value of volunteers The third sector acknowledges the good work the Welsh Government has done to ensure that volunteer time can be used as match funding within the current programmes. It is vital that volunteer time as eligible in-kind match funding, as well as advance payments, continue into any new programme post 2013; without them the ability for community based third sector organisations to actively contribute to the programme priorities would be greatly reduced 5

6 The economic downturn has positively influenced the mainstream view on the importance of volunteering, and it is recommended that the Welsh Government is asked to further recognise the economic and societal benefits of volunteering within the next programme and commit to a formal target for volunteering placements for participants. This would fit well with a social exclusion/poverty priority where job outcomes and full qualifications are often not appropriate. A focus on green jobs and renewable energy with the importance of community led interventions The Europe 2020 priorities of 20% carbon reductions, 20% energy efficiency improvements and 20% renewable energy increases should act as minimum requirements to the Welsh Government and a more ambitious set of targets should be adopted. The role of the third sector and especially community groups should be central to this plan. It should include financial instruments for community led micro and small scale renewable energy generation schemes and a specific green jobs strand for Intermediate Labour Market (ILM) activity. Sustainability where do we want to be at the end of 2020? Planning should begin now for the landscape post-2020, when the level of European interventions is likely to be greatly reduced. This means that more must be done to encourage and incentivise financial sustainability within key areas. One barrier to projects developing income streams, especially under ESF, is that organisations are penalised for generating an income through a reduction in grant. To genuinely promote and encourage financial sustainability the Welsh Government should scope opportunities to improve flexibility in EU funding rules to incentivise, rather than hinder, sustainable financial models such as loan and legacy funding. 6