Making it work: the European Social Fund - European Union Committee Contents

CHAPTER 6: Conclusions and Recommendations

Chapter 2: The ESF in practice

181.  Our witnesses have recognised the value of the European Social Fund, pointing to its particular benefits in terms of introducing new ideas, social inclusion and economic development and we conclude that the ESF is an important component of the EU's broader social and economic cohesion policy (paragraph 71).

182.  The ESF is funding particularly valuable work with the hardest to reach and least skilled. While higher level skills are crucial for the EU's economic development, the ESF has limited resources and we remain convinced that its added value lies in its ability to make the hardest to reach and the least skilled employable. We recommend that priority be given to safeguarding this aspect of the ESF's role (paragraph 72).

183.  We are concerned that the system of competitive tendering under co-financing in England, whilst having many merits, may have led to providers being incentivised to "cherry pick" participants who are easiest to place into the labour market, at the expense of the hardest to reach. We therefore recommend that this risk be explicitly addressed by, for example, delivery bodies being contractually required to demonstrate that they are still delivering to the hardest to reach (paragraph 73).

184.  It is evident that many of the providers best able to assist the hardest to reach are in the Third Sector. We have heard conflicting evidence as to their reduced involvement in the ESF England programmes in the course of the current programming period. It is critical that the objectives of the ESF are delivered and that the appropriate participants are reached. No particular contractor or sector has a right to funding; any award must be based on merit. We acknowledge, though, the special value that the Third Sector can bring to the programme and therefore conclude that it is important that small operators have a fair opportunity to innovate and to be involved. We recommend that the Government and the Commission ensure that this Sector is encouraged to participate to its best ability in the programme (paragraph 74).

185.  We welcome the work already being undertaken through the ESF to support green skills and consider this aspect of the ESF to be relevant as it moves forward (paragraph 75).

186.  Additionality is a fundamental principle underlying the EU's Structural Funds and measuring it can be complex. We heard particularly that the need to monitor the principle constantly is challenging. We therefore recommend that Managing Authorities share this responsibility with those disbursing the Fund (paragraph 76).

187.  We agree with the Commission that the ESF is a very visible and tangible benefit of the EU. While we were impressed by the efforts being made to publicise it, we agree that its visibility needs to be improved. We recommend that Member States and the Commission make this a priority. The Commission should assist with the sharing of best practice between Member States and regions as appropriate (paragraph 77).

188.  We heard evidence to support the importance of Technical Assistance to the effective delivery of the ESF, and recommend that Managing Authorities both work with organisations to overcome difficulties encountered in identifying match funding and explore the possibility of introducing a higher ESF intervention rate for Technical Assistance (paragraph 78).

189.  We were pleased to hear the plans being put in place by the LSC to deal with the transition to new arrangements for administration of the ESF following the dissolution of the LSC in England. Nevertheless, such a transition will not be simple. At such a key time for the ESF in England, we recommend that the Government monitor arrangements closely to ensure that the requirements for the delivery of the second phase of funding for the 2007-13 programme this year are handled efficiently and do not lead to delays in commissioning and delivering new provision (paragraph 79).

Chapter 3: Measuring the effectiveness of the ESF

190.  It is clear to us that a trusted and robust methodology for assessing effectiveness is key to the short- and long-term future of the European Social Fund. We conclude that there is substantial room for improvement (paragraph 111).

191.  We welcome moves to strengthen the evaluation systems for the current programme, particularly the improved opportunities for mutual learning and sharing of best practice within and between Member States. However, we note that there are no set dates for evaluations under the new "ongoing" system. Data must be produced more quickly and regularly so that performance issues can be addressed mid-way through a programme, rather than after the seven years has run its course. Otherwise the value of evaluations could be lost and the time taken to conduct them wasted. We therefore recommend greater use of timely interim reporting to the Commission and the Government (paragraph 112).

192.  Above all, it is clear to us that there is an excessive reliance on measuring hard outcomes almost to the exclusion of soft outcomes. We recognise the Minister's argument that job outcomes are the ultimate and legitimate aim of ESF intervention. However, intermediate work with the hard to reach is a necessary route towards the labour market, helping to improve people's employability. Although this may not lead to tangible outcomes during the lifetime of a programme, such action is nevertheless necessary and valid. We therefore recommend that the Government reconsider their rigid approach of increasingly withholding payment from providers unless they get people into work and keep them there, not least because a failure to secure a job does not in itself indicate a flaw in the activity (paragraph 113).

193.  Moreover, we are not convinced that soft outcomes are sufficiently difficult to define to prevent their inclusion in assessments of the effectiveness of the ESF. We are concerned that the complete exclusion of soft outcomes would encourage providers to focus on those closer to the labour market at the expense of the harder to reach. We were particularly struck by the use of longitudinal cohort surveys and recommend that such surveys be made compulsory at a regional and co-financing organisation level. Not only do we consider that these would be of use in capturing soft outcomes, we believe they would also facilitate assessments of the sustainability of hard outcomes, such as job retention and progression (paragraph 114).

194.  We note that the England ESF Operational Programme already includes soft outcome indicators and we recommend that the Government and the Commission explore what other measures could be used to record progress amongst those further from the labour market. Ultimately, programme providers should be required to collect data on soft and hard outcomes alike (paragraph 115).

195.  As many of our witnesses pointed out, it is necessary to have an element of bureaucracy in any programme, particularly with the sums of money involved in the ESF and the sensitivity around the spending of EU money. Nevertheless, it is essential that this is proportionate to the size of the programme. We therefore recommend that the Government continue to press for the reduction of the 10-year records retention requirement for smaller organisations, whose valuable role in the ESF must not be hindered by disproportionate audit requirements (paragraph 116).

196.  Given the differing views among our witnesses about the effect of co-financing on the bureaucratic burden faced by providers, we recommend that the Government carry out an assessment of this in order that any such issues can be identified and addressed systematically (paragraph 117).

Chapter 4: Flexibility of the ESF

197.  We recognise the need for a Fund that is sufficiently flexible to respond to external factors such as changes in domestic policy and the recent recession. However, there is a balance to be struck between flexibility and the need for co-financing organisations and project providers to remain accountable and for the project to remain within the rules and the authorisations made under them. It is also important to avoid unnecessary or unwelcome derogations of funding (paragraph 149).

198.  We note the wealth of responses that have been introduced as a result of the changed labour market and economic circumstances and we commend the Commission's efforts to ensure that where necessary, changes to programmes were delivered on the ground as quickly as possible. We are concerned by the delay experienced in the UK in money reaching programmes following the release of extra funds due to the revaluation of the euro. We recommend that the Government, working with the Commission, conduct a full review of the situation in order that this does not hinder the ability of the ESF to respond quickly to rapidly changing circumstances in future. The Commission should share the findings of the review with other Member States in order to facilitate learning across the EU (paragraph 150).

199.  Our witnesses' views differed as to the effect of the recession on the ability of providers to deliver the original targets set for programmes. The rapid onset of the recession and the changes this has necessitated in the ESF in the UK demonstrate that a multi-annual programme such as this must be cast with sufficient flexibility from the outset to cope with unforeseen and rapid changes in the economic and employment environment. We recommend that the Government monitor closely how providers' ability to deliver their targets has been affected as we hopefully move into a period of economic recovery. It is vital that Member States and the Commission use the opportunity provided by the recession to learn valuable lessons about how the flexibility of the ESF can be improved in future, as also about where it is working well (paragraph 151).

200.  The ability to alter programme targets and move funding between projects and priorities with greater flexibility is desirable. We recommend that such flexibility be integrated into the operating rules and that the Government advocate this approach in discussions on the future of the policy (paragraph 152).

201.  Priorities for the use of the ESF will differ between regions across the European Union and within Member States. Regional flexibility, allowing for the different economic profiles of regions, is therefore essential for the efficient and effective delivery of the ESF. We recommend to the Government that in future, there should be real and substantive opportunity for regional priorities to be built into the programme while recognising the national and European nature of the Funds. We consider that there is room to address this in the next phase of the 2007-13 programme and in any new programme after that date (paragraph 153).

Chapter 5: Future of the ESF

202.  We agree that the EU's new Jobs and Growth Strategy should drive the future direction of the Structural Funds, including the European Social Fund. The extent to which the ESF and the Commission are able to assist in co-ordinating pro-active national labour market policies, as advocated by the Commission, is likely to be a political choice driven by the economic health of Member States (paragraph 173).

203.  The focus of Europe 2020 and the ESF should appropriately be on sustainable development as the development of the low-carbon economy is likely to be an important element of the EU's future economic growth. We therefore recommend that, when designing priorities for the European Social Fund in the 2014-20 period, the appropriate contribution of green skills across the economy, in terms both of greening existing jobs and professions and developing new skills, should be recognised and supported (paragraph 174).

204.  Over the course of the 2014-20 period, we recommend that the limited resources of the ESF continue to be focused on assisting the hardest to reach and least skilled into work or back into work. In some instances, a regional skills analysis might suggest that there is a need to increase the proportion of funding devoted to skills at level 3 and beyond. Where resources permit, the ESF may have a role in this type of assistance as long as additionality can be demonstrated and as long as the ESF continues to meet the needs of the hardest to reach and least skilled (paragraph 175).

205.  The Government advocate an end to the availability of Structural Funds in the more prosperous Member States, including the UK. This policy raised concern among most of our witnesses. Opponents of the policy favoured the certainty of a multi-annual budget, considered that unemployment does not respect national boundaries and were worried about what would replace the ESF given its provision is, by definition, additional to existing national programmes and practices. We note the Commission's view that the ESF should in principle be available throughout the EU, and, like the Commission, consider that the ESF is a concrete expression across the EU of Europe's solidarity with its citizens (paragraph 176).

206.  We were unconvinced by the arguments presented to us by the Government and we were particularly disappointed to note that the Government have no plan as to how the ESF should be replaced in the UK specifically. Undoubtedly, the focus of the ESF ought to be the less prosperous Member States. However, unemployment does not respect national boundaries and, in the particular context of the economic downturn, we do not support withdrawal of the ESF from the UK and other more prosperous Member States without a clear indication of what would follow in its place (paragraph 177).

207.  We note too a lack of consensus between the UK Government and at least one of the devolved administrations. We therefore draw the Government's attention to the importance of involving the devolved administrations as fully as possible in discussions seeking to establish a common UK negotiating line on the future of the ESF (paragraph 178).

208.  We are not convinced that alignment of the ERDF, ESF and other Funds is best achieved by creation of one single Fund; each Fund has particular objectives which ought to be retained. We recommend that the Funds be strategically aligned according to overarching policy priorities such as the development of a low carbon economy (paragraph 179).

209.  The systems for processing the respective Funds should not differ and alignment between them would be facilitated by approximating the administrative requirements, timetable and scheduling, and operational liaison for each Fund. We recommend that the Government review these arrangements before the start of the next programming period, and in the post-2013 period, with a view to operational simplification at the local, national and EU levels (paragraph 180).

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