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
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
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
Chapter 3: Measuring the effectiveness of the
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
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
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
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
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
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).