Select Committee on Work and Pensions Minutes of Evidence

Memorandum submitted by Community Service Volunteers CSV (ESF 18)


    —  CSV is a national charity using ESF funds for over 20 years providing training and advice to over 30,000 individuals.

    —  CSV is an active member of the Third Sector European Network whose chairperson is the CSV Director of European and Statutory Resources. She sits on the English Monitoring Committee, administered by the DWP.

    —  Previously relations with the DfEE were felt to be very positive.

    —  The major change in the administration of ESF is the introduction of Cofinance.

    —  CSV found the consultation on Cofinance limited and meaningless.

    —  Cofinance is itself perceived to be unhelpful for those working with the hard to help, in particular those working with people with disabilities and capacity building projects.

    —  CSV believes it may be the case that FE Colleges and schools are being funded to work with groups who have extensive support needs because they are perceived to be in need of funds or known to CFOs.

    —  CSV has concerns about shrinkage of the programme and loss of resources for those furthest from the labour market.

    —  CSV has concerns about accountability.

    —  CSV believes the introduction of Cofinance runs counter to the government's policies on promoting active communities, promoting inclusion and developing the VCS as service providers.


  1.1  CSV is a national agency operating across the UK in the fields of volunteering, training and regeneration. It has a turnover of approximately £28 million employs over 450 staff and runs some 300 projects. CSV uses European funding (Objective 3) in all nine English Government office regions, outwith the Objective 1 areas.

  1.2  In 2002 CSV provided training and information and training advice to over 30,000 individuals using some £3 million from the European Social Fund.

  1.3  CSV has been accessing European Social Funds since the early 80s and is one of the limited number of organisations employing specialist staff to monitor the use of it's European funding.

  1.4  In the time CSV has been using these funds the Department of Employment, the DfEE, the DfES and now the DWP have variously administered them. CSV accessed funds when they were dispersed on a sectoral basis through NCVO and subsequently through the Government Offices following regionalisation in 1998.

  1.5  CSV is an active member of the Third Sector European network, TSEN is a group comprising the regional voluntary sector support agencies for providers using ESF funding in England and a number of national agencies with a constituency of approximately 20,000 providers.


  2.1  The administration of Objective 3 funds by the DfEE and the development of Agenda 2000 was a model of good practice in engaging the voluntary and community sector that was the envy of other European member states.

  2.2  CSV as part of the VCS was able to participate in the design of the current programme agenda 2000 through a thoroughgoing consultation process. This included contributing to the identified priorities of the English Operational Programme, design of core selection criteria, allocation of funds (to a limited extent) and aspects of the programme's management including the retention of advance payments which ensured that the VCS which has operated substantially in the parts of the programme designed for the disadvantaged, was able to continue providing for the hard to help; those groups who have not traditionally been able to access government programmes.

  2.3  CSV, as part of the VCS was able to transmit to the DfEE in the year 2000 that a delay in implementing the new Objective 3 programme due to protracted negotiations with the European Commission would have dire consequences for the VCS infrastructure of projects working in training and regeneration. The department was sensitive to the predicament of the VCS and introduced the Gap Guarantee Fund to support the VCS through 6 months of uncertainty while the programme's introduction was delayed.

As a result the infrastructure remained in place and many VCS providers were able to undertake training and regeneration activities in the new programme.

  CSV like much of the VCS works with the hard to help, people who will not readily translate into hard outcomes such as jobs or higher-level qualifications such as NVQ3 and the needs of these groups were reflected in the subsequent design of particularly Policy Field 2—Equal opportunities for all and promoting social inclusion of the new programme.


  Under the aegis of the DWP the administration of ESF Objective 3 has shifted dramatically in the last two years with the introduction of Cofinance.


  4.1  Cofinance is an integrated system whereby European funds are matched with mainstream government programmes or other regeneration funds to enable the training provider to access one stream of funding.

  The provider is no longer required to find match funding (55% of the project value) their project is funded 100% by the Cofinancing Organisation. The scheme was first introduced in Learning to Succeed as part of the strategy for post 16 funding, the consultation that followed was piecemeal and ill organised.

  4.2  Whilst the DWP invited the VCS representatives to contribute to the Cofinance Project Board it was clear that little attention would be paid to the concerns expressed by the VCS. Concerns about the narrowing of the programme, the loss of match funding and regional partnerships, additionality and the social justice focus of the programme were marginalised as narrow sectoral interests.

  Although we were involved in substantial consultation about the European Social fund-Cofinancing Consolidate Guidance for CFOs with the Cofinance Project Leader, and a number of significant amendments were promised such as the need for CFOs to make advances to projects, projects being able to retain Match Funding in cash and in kind thereby lengthening their project, in the event some were not made and others CFO choose to ignore.

  4.3  Cofinance was introduced in 2001, at that time CSV ran seventeen projects in 8 Government regions, 25% of these projects were for people with disabilities, 20% for young people at risk of offending and out of school, 20% were for refugees. The remaining 35% were media training projects for women and people from ethnic minorities who are underrepresented in the media.

  4.4  In 2003 CSV runs eleven projects in 4 regions directly funded by Government Offices and three national projects. Four of CSV's projects are funded by an LSC; sixteen project bids made to CFOs were rejected.

  CSV has been a very active member of TSEN (The Third Sector European Network) and tried to engage with the DWP on the unforeseen consequences of introducing co finance for its projects working with the hard to help.


  5.1  It became apparent in 2002 when many Government Offices were moving towards dispersing substantial amounts of funding through Cofinance that the coverage afforded by Cofinance plans across the nine regions would be piecemeal, this gave us cause for concern since few of the early CFOs and indeed to the present day, are interested in providing for those with disabilities. In those areas where we were providing projects for people with disabilities GONE and GOSW the Learning and Skills Councils and Job Centre + did not submit activities for this group as part of their Cofinance Plan or indeed their prospectus.

  5.2  In the Northeast the GO has allowed some direct bidding which means CSV is still able to provide for this group for the time being and similarly in the Southwest direct bidding is being allowed for this group however since it is the intention of all GOs to move to virtually 100% Cofinacing from April 2003 we are very concerned about the future of these projects.

  5.3  As a general point CSV projects along with many VCS projects are subject to the vagaries of CFO agendas in terms of geographical coverage and extremely precise targeting. Many CFOs exhibit little interest in providing support for those working with the disabled, virtually none of those in regions where CSV operates are providing support for capacity building measures or anti discrimination measures. There are clearly geographical inequalities under the Cofinance system, in some cases targeting is so precise as to be exclusive rather than promoting social inclusion. E.g. the LSC for Tees Valley operating in Policy field 2 is only proposing to support projects working with seventeen year olds in their last year at school undertaking GCSEs. Job Centre+ in the Northeast does not operate in Policy Field 2[9] thus CSV projects wishing to provide for anyone but 17 year olds are precluded from applying for European funds that in the case of Tees Valley were used to great purpose in the past for capacity building.

  5.4  A similar picture of CFOs picking and choosing areas of training to cover emerges as a pattern in London, the Southwest and East Midlands and West Midlands. The report commissioned from Alex Fraser Associates[10] by the DWP on the implementation of Cofinance in 2002 suggested there was a tendency for CFOs to be driven by their own priorities rather than Regional Development Plans, that in the experience of CSV has been borne out.

  5.5  Further, in some areas there is a perception that work previously undertaken by the VCS, working with the hard to help is now the subject of ESF Cofinance funding for colleges through Learning and Skills Councils where the colleges are less well placed to offer support but perceived as being in need of funding.


  6.1  CSV was able to mobilise approximately £3 million of match funding per annum, some cash match but also significant amounts of match funding in kind from colleges and the media as well as volunteer time quantified according to a DWP schedule. This imaginative measure on the part of the DWP gave CSV projects the opportunity to access European funds for projects that had an abundance of good will and active citizens but limited cash income.

  6.2  The introduction of Cofinace is resulting in actual shrinkage of the available funding since Co financed projects are funded for the most part with 100% ESF funds matched against existing activities. Three unintended consequences arise.

    —  The European funding will support fewer projects over a shorter period.

    —  Funds that were drawn into an area such as Community Fund and other monies may now go elsewhere.

    —  The additionality of the programme is hard to evidence since the criteria governing successful Co financed projects are those of government programmes.


  7.1  CSV has been using ESF funds for over twenty years, during this time we have paid close attention to monitoring the use of those funds and the eligible activities undertaken with them.

  7.2  We have a very real concern that the position in relation to Cofinance in terms of liability is still unclear. We have been told by the DWP that with the introduction of Cofinance the CFO will become the "end beneficiary" that is to say projects will no longer be liable to repay any monies used for ineligible activity in the event of an audit discovering such activities. Evidence of eligible expenditure, auditing and recording of time spent on projects will not be necessary.


It is relatively easy in ESF terms to apply funds to activities which are not eligible without being in any way fraudulent, eg if a project makes a Final Claim for 23 beneficiaries doing 15,000 hours and the evidence/timesheets for one or a number of beneficiaries is absent or incomplete then all cost relating to that/those individuals becomes ineligible and must be repaid.

  7.3  However the European commission in agreeing to Cofinancing retained the right for its auditors to "drill down" to verify the existence of providers and beneficiaries.[11] No thorough going guidance in terms of eligible expenditure has been issued by CFOs to our knowledge and project may be unwittingly engaging in ineligible activity which may rebound on them at a date in the future, either in terms of CFOs seeking to recover lost costs or choosing to no longer work with an agency who may have caused them to repay funds. The commission latterly clarified that all records of activity and expenditure on ESF projects need to be kept until three years after the end of the GB programme, that is until 2011[12].

  7.4  The keeping of records is not onerous for our charity as we are obliged to account for our activity and expenditure according to the SORP II regulations, whilst we are responsible for our activities we can ensure that information is kept correctly and is audited, we cannot feel that certainty about other agencies keeping information for which we may ultimately be liable.


  8.1  The co-financing proposals as a whole is removing communities from participation in the framing of solutions and will fracture partnerships, and reverse the whole process that Policy Field 2 (over a quarter of the programme) is designed to address. In addition many millions of pounds worth of activity at grass roots level may be fragmented by losing the ESF "glue" that binds it into a coherent response to need.

  8.2  This at a time when we understand the agendas of the UK Government, the European Union and the Commission are moving towards more work with excluded groups, characterised by the production of the National Action Plan on Inclusion. The plan variously commits to mobilise all actors, notably voluntary and community groups to help promote inclusion and discusses how the structural funds could be used to promote the inclusion agenda.

  8.3  The DWP engagement in the promotion of active communities has been at best slow, one area where the department could have made a significant contribution through the operation of Policy Field 2 is now being actively undermined by the policy of Co finance.


  9.1  European Social funds (Objective 3) have been an important source of support for CSV developing basic skills, training and integrating the hard to help in further training and employment.

  The projects historically funded by ESF were those for individuals unsuitable for government programmes.

  9.2  The introduction of Cofinance whilst helpful in principle has had a number of unintended consequences which are undermining local provision for hard to help groups, the virtual abolition of direct bidding to Government Offices for ESF means that CSV will no longer be able to provide for these groups or assist in the development of local community responses to their problems.

  9.3  The only way to ensure that both top down strategic responses and bottom up local responses continue to be offered to the most disadvantaged groups and communities is by retaining a mixed economy in the dispersal of European Social Fund monies by Government Offices as originally suggested by the DWP in 2001.

Tamara Flanagan

Director of European and Statutory Funding

27 March 2003

9   Analysis of CFO in Northeast coverage undertaken by TSEN Officer 2003. Back

10   Implementation of Cofinance, Alex Fraser Associates 2002. Back

11   Cofinancing: The impact on providers, Ken Lambert ESF News April 2002. Back

12   Information letter from ESFD March 2003. Back

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