Direct bidding and co-financing
39. In the UK there are two distinct systems of allocating
ESF funding: direct bidding and co-financing. Under the system
of direct bidding, applicants apply directly to Government Offices
for ESF funding. The Government Offices manage the process of
appraising and selecting the best applications. Selection panels
comprising Government Office staff and regional partners score
applications and recommend lists of projects for approval to Regional
Committees. Approved projects are required to find the match-funding
while also bidding for ESF grant. The system of direct bidding
is described in the following chart:ESF
- The Old Application System
European Union 2003
40. In September 2001, a new system called co-financing
was introduced in England.
Under co-financing, the ESF grant and the match-funding are provided
jointly from co-financing organisations (CFOs). CFOs are certain
large public sector bodies that have been awarded CFO status and
currently include the Learning Skills Council, Jobcentre Plus,
six local authorities, one Connexions Partnership, three Regional
Development Agencies and one Business Link.
CFOs have a number of distinguishing features, such as being public
bodies with their own budgets that can be used for the purpose
of match-funding and have a remit for supporting ESF funded activities
and entering into contracts with third parties. According to the
DWP, under co-financing:
"Applicants no longer have to make separate
applications for ESF and match-funding, but can make a single
application to a Co-financing Organisation (such as the Learning
and Skills Council or Jobcentre Plus) which is responsible for
bringing together ESF and domestic match-funding streams. Co-financing
Plans must indicate the activities that ESF will fund against
the corresponding activities and outcomes funded through match-funding."
41. The system of co-financing is described in the
does it work?
European Union 2003
42. When organisations apply for CFO status, they
must set out how they intend to improve the effectiveness and
efficiency in the management of ESF funding while reducing the
administrative burdens on service providers. Applications to
become CFOs are judged by Regional Committees. The CFO submits
a co-financing plan to the Government Office setting out, amongst
other things, its consultations with partners, its priorities
and expected results. The CFO then publishes its prospectus, against
which it invites service providers to submit tenders. The CFO
assesses tenders against the published criteria and accepts those
that best fit the criteria. There is no right of appeal under
co-financing when an application for funding is rejected.
From 2003, the majority of the regional ESF funding in England
will be channelled from Government Offices to providers via CFOs.
43. For the Objective 3 programme, an element of
direct bidding still exists in all areas of Great Britain, except
London. Co-financing, on the other hand, only exists in Objective
1 regions and 3 areas of England. The relative merits of direct
bidding and co-financing are discussed in section 6.