RESPONSE OF THE NORTH WEST REGIONAL ASSEMBLY AND NORTH WEST REGIONAL DEVELOPMENT AGENCY TO DTI CONSULTATION ON DRAFT NATIONAL STRATEGIC REFERENCE FRAMEWORK
22nd May 2006
OVERARCHING ISSUES AND SUMMARY OF RECOMMENDATIONS The North West of England has been the largest UK recipient of EU Structural Funds during the period of 2000-06 (£1.6 billion). These funds have been used effectively and creatively delivering approximately 160,000 jobs and sustainable change in the region. We expect that the next programme of funding will ensure the continuation of the excellent work to date and deliver the overall goal of Structural Funds - to promote regional development and reduce inequalities between regions. The Regional Economic Strategy (RES) is the region’s response to the Lisbon Agenda and we see the Competitiveness and Employment funds as absolutely vital in delivering its priorities. The RES covers both sub-regional and regional priorities and rural and urban priorities and brings them together in a cohesive plan for the coming years. The North West calls on the UK government to recognise the overarching importance of Regional Economic Strategy as the blueprint for sustainable economic growth in the region and that its priorities for the region will be the priorities for the future Structural Funds programme. The Regional Economic Performance Public Service Agreement (REP-PSA2) target: “to make sustainable improvements in the economic performance of all English regions and over the long term reduce the persistent gap in growth rates between the regions,” is highlighted as the overall aim of ERDF in England. The North West believes that REP-PSA2 should be the common objective for both ERDF and ESF and that this would provide the evidence base for allocating the overwhelming majority of the UK’s Competitiveness and Employment Fund to those regions (and nations), which currently have below average GVA. Furthermore, the three northern English regions, joined together in the Northern Way, have the nationally agreed aim of closing the annual £30 billion GVA gap with English average. The Structural Funds give us the opportunity to invest more heavily in the North and to increase its contribution to the UK economy. The Northern Way should be more strongly referenced in the NSRF and inform both the financial allocation to the three regions and allow that Northern Way regions are eligible for an additional objective within ERDF of infrastructure and accessibility in order to facilitate achievement of its ambitions. The UK Government acknowledged during previous dialogue that the region must not face “a cliff edge”1 of funding. If the principles above are not all followed, there may be a need for safety nets to ensure that no region in need loses a disproportionate share of funding. The North West welcomes the £275-£310 million already earmarked for Merseyside as a ‘phasing in’ region, however we also seek a top slice of the national Competitiveness and Employment Fund for Cumbria, as the only UK region in economic decline, as well as a significant sums for Lancashire, Cheshire and Greater Manchester. In conclusion the North West region as a whole merits a substantial sum from the UK’s €6.2 billion Competitiveness and Employment Fund – at the level of £1.2 billion pounds in total. With these points in mind we welcome the opportunity to respond to the draft NSRF and provide detailed responses to the questions asked.
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Letter from Chief Secretary to the Treasury to NWRA, March 2005
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Recommendations are in italics throughout the document and are listed below:
1. The North West calls on the UK Government to recognise the overarching importance of the Regional Economic Strategy as the blueprint for sustainable economic growth in the region and that its priorities for the region will be the priorities for the future Structural Funds programme.
2. The North West believes that the REP-PSA2 target should be the common objective for both ERDF and ESF and that this would provide the evidence base for allocating the overwhelming majority of the UK’s Competitiveness and Employment Fund to those regions (and nations), which have below average GVA.
3. The Northern Way ambition should be more strongly referenced in the NSRF and inform both the financial allocation to the three regions and the eligible activities of ERDF and ESF.
4. The sub-region of Cumbria as the only UK region in economic decline, should receive a top slice of the national Competitiveness and Employment fund.
5. The North West merits a substantial sum from the UK’s €6.2 billion Euros Competitiveness and Employment Fund. .
6. The region broadly agrees with the NSRF’s assessment of the economy of regions and nations but wishes to see more direct emphasis on the RES and the sub-regions including Cumbria. (Question 1 – Q1)
7. The North West seeks regional flexibility regarding the activities the ERDF objectives will cover and recommends that Northern Way regions are eligible for the additional objectives of infrastructure and accessibility in order to facilitate achievement of its ambitions and the REP-PSA2 target. (Q 2)
8. The NSRF should make explicit that ESF’s two main objectives can be supplemented by other objectives in line with the relevant Regional Economic Strategy/Regional Skills Priorities. In particular it should be made explicit that workforce development skills at all levels and skills for life may be included in the priorities for ESF. (Q 2)
9. The North West recommends that the ESF component delivers working linkages and mutual support with the ERDF component within a single regional programme. (Q 2)
10. Clearer reference needs to be made in the NSRF to ICT and its “Lisbon” role in driving competitiveness. In particular the NSRF needs to spell out the importance of having the systems and expertise in place to make appropriate investments in technologies that deliver explicit elements of the priorities and ensure best practice pervades throughout the ERDF and ESF programmes. (Q3)
11. A more detailed discussion needs to take place on what the alignment of ERDF with domestic programmes will mean for the involvement of RDAs and other potentially involved organisations. (Q 4, 9 and 10)
12. There needs to be sufficient flexibility for regions so they are able to use their own Regional Strategies for Skills to best target funding where it is most needed. (Q 4, 9 and 10)
13. There must be synergy between the ERDF and ESF strands of the Structural Funds to provide a more holistic approach to funded activity. (Q 4, 9 and 10)
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14. Governance arrangements for each region must be able to build on existing strategic partnerships, recognising the potential of all partners including the Regional Assemblies and Voluntary Sector as well as Local Authorities and Sub-Regional Partners. The Regional Programme will also recognise the ring-fenced allocation for Merseyside as a ‘phasing in’ region. (Q 5)
15. We also seek some clarity in regard to what the Government expects the role of Local Area Agreements to be concerning coordination and delivery of European funding and their inter-relationship with the rest of the programme. (Q 5)
16. We welcome the inclusion of equality and environmental sustainability as CrossCutting Themes, but regret that there is no clear reference to ICT and its role in driving competitiveness throughout the region. (Q 5)
17. Equal opportunities and social inclusion should be included in the Equality Cross Cutting Theme. (Q 5)
18. Programmes should have to develop integrated plans addressing equal opportunities and social inclusion in the same way as is proposed for Environmental Sustainability. (Q 5)
19. The North West seeks clarification in the final NSRF on how the UK Government intends to incorporate the European Commission policies of JEREMIE and JESSICA into future programmes. (Q 5)
20. The opportunities presented by the Territorial Cooperation objective in developing innovation and cohesion should be mentioned in the NSRF. (Q 5)
21. More than 50% (e.g.70%) to go into the ERDF fund at national level, especially if only ERDF is to be aligned to the REP-PSA2 target and not ESF. (Q 6)
22. A basket of criteria should be used, drawing on both the Council recommendations and the Government’s suggestions, which will provide an allocation reflecting both the purpose of the Structural Funds including the Lisbon Agenda and meeting the needs of regions with GVA less than average - especially those in the Northern Way. (Q 7)
23. The North West wishes to see an additional allocation criteria for ESF in order to maximise the correlation between ERDF and ESF, in particular lack of prosperity measured by GVA per capita and lack of innovation (using recognised measures of the knowledge economy) should be used. (Q8)
24. North West agrees that ESF delivery arrangements should bring together ESF and domestic employment skills funding. The existing co-financing arrangements do not allow for innovation and sufficient flexibility and the regions seeks reassurance that the new arrangements can reflect regional and local needs. (Q 11)
25. We would like to see regional flexibility to enable alternative arrangements to run alongside co-financing should this prove to be the most appropriate way forward for some ESF activity. In addition the region will require an opportunity to determine spend to best tackle priority areas important to the North West. (Q 11)
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DETAILED RESPONSES TO QUESTIONS 1 TO 112 In the responses below we give our general feedback on the questions – more technical issues will be developed in the region’s single Operating Programme. Question 1: Do respondents agree with the assessment in the draft National Strategic Reference Framework of the economic strengths and weaknesses of the UK’s nations and regions? The Regional Economic Strategy (RES) is the region’s response to the Lisbon Agenda and we see the Competitiveness and Employment funds as absolutely vital in delivering its priorities. The RES covers both sub-regional and regional priorities and rural and urban priorities and brings them together in a cohesive plan for the coming years. The North West agrees with the NSRF analysis, and is working across the region to bridge the gaps in terms of productivity, competitiveness and skills. Thus the region has clearly identified its strengths/weaknesses, and has identified three major drivers which can be aligned to the NSRF UK assessment:• • •
Improve productivity and grow the market Grow the size and capacity of the workforce Create and maintain the conditions for sustainable growth
The region supports the Government’s commitment to make sustainable improvements in the economic performance of all English regions, and over the longterm reduce the persistent gap in growth rates between the regions. This is of particular interest to the North West where GVA per head is 12% lower than the England average, resulting in an annual output gap of £13 billion. The region also supports the overall approach based on the National Reform Programme, and the clear steer that Structural funds should respond to clearly defined market failure, and to do so in the most pro-competitive manner. The NSRF must recognise that the regional dimension will include investments at regional, sub-regional and local levels. The RES provides the framework for prioritising needs and opportunities within the North West region. The North West has a highly regarded university infrastructure and particularly agrees that there should be more investment in Research and Development, to support the implementation of the Lambert review conclusions that the business-university collaboration should translate the products of research into social and economic benefits. The European Union has recognised the specific needs of Merseyside in awarding the subregion with ‘phasing-in’ status, and a ring-fenced allocation within the region. This is welcomed by the region as Merseyside has shown an excellent track record in previous Structural Funds programmes, creating 115,000 new jobs and 12,000 new businesses and will build on this best practice in the future. Although the NSRF assessment is not region specific, issues such as Cumbria’s declining economy3, combined with the barrier of its geographical location, presents a unique issue of great national concern which should be referenced in the assessment of economic strengths and weaknesses in the NSRF (and should be considered further in the allocation of Structural Funds). 4 Due to the fact that the issue of ‘Extra-regio’ funding was not resolved, 2
Questions 12, 13 and 14 refer to Scotland, Wales and Northern Ireland respectively. According to Eurostat data, the sub-region of Cumbria is in an exceptional situation shared only by four other EU NUTS II regions – it is in real economic decline. Between 1998 and 2002, GVA in West Cumbria declined by 2.6% compared to a UK growth rate of 21.6%. The other regions being Berlin, Guyanne, Severozapad (CZ) and Moravskoslezsko (CZ). 4 Cumbria – like Merseyside – also suffers under the ‘extra-regio’ rules of Eurostat by which off-shore oil revenues are included in Cumbria’s current GDP statistics. These equate to 77% of the EU-15 3
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Cumbria narrowly missed out on specific status of ‘phasing in’ from the European Union. This status would have meant up to €200 million for Cumbria. Other areas within the North West also suffer from extremes of economic and social deprivation. In Greater Manchester for instance, despite a growing economy, 7 of the 10 local authority areas within Greater Manchester (72% of its population) are amongst the 15% most deprived in the country. Twenty-five of the country's most deprived neighbourhoods are within the city region. Despite a strong and resilient industrial culture with the attendant skills and training infrastructure built up over many generations, Lancashire has pockets of high urban unemployment and severe social and economic deprivation, including a high proportion of "hidden" and long-term unemployed with low levels of basic skills. Four Lancashire Districts are included within the "top 50" most deprived in England according to the Index of Multiple Deprivation 2004 (IMD 2004). At the smaller "Super Output Area" (SOA) level, sixty areas in Lancashire are ranked within the top 5% most deprived in England and 120 areas are within the top 10% most deprived. Although Cheshire benefits from relevantly high levels of employment in comparison to other areas in the North West region, this masks acute problems within the sub-region. Eleven Cheshire neighbourhoods fall in the top 10% most multiply deprived neighbourhoods in England and thirty-nine Cheshire neighbourhoods fall in the top 20% most multiply deprived neighbourhoods in England. All 22 Cheshire neighbourhoods at SOA level, which fall within the top 10% of the Barriers to Housing and Services domain of the 2004 Index of Multiple Deprivation, are within rural wards. Approximately 40% of Cheshire's population lives in mainly rural areas. On the Skills and Employment assessments the region recognises that the UK has a high skills level and compares well with other countries, but this does not mean that technical and higher level skills should be excluded as part of the Structural Fund mix. This is an important point as the NSRF gives the impression that only lower level skills will be eligible for funding. We need to develop a mature and better skilled workforce, and the attainment of technical and higher level skills is a crucial element in achieving this. People can then move up the workforce chain and create opportunities as a result of that movement. The North West would wish to support technical and higher level skills, particularly in the leadership and management areas. The region also recognises that people on invalidity benefit need support to re-enter the labour market, but this should not be at the expense of upskilling and developing an adaptable workforce. A balance needs to be struck. The region gives strong support to the concentration in the NSRF on environmental matters, particularly on the need for the development of innovative environmental technologies, and the relevant skills needed to support these innovative initiatives. We welcome in the NSRF the reference made to the Northern Way agenda and the role of city regions in promoting growth and competitiveness, although these could and should be strengthened. The region broadly agrees with the NSRF’s assessment of the economy of regions and nations but wishes to see more direct emphasis on the RES and the sub-regions, including Cumbria. Question 2: Do respondents agree with the proposed priorities for future Convergence and Competitiveness Programmes in England, Scotland, Wales, Northern Ireland and Gibraltar? average - higher than the 75% threshold - however this includes 2% allocated by way of ‘extra-regio’ GDP which if not included would have led to phasing in status.
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The North West response only makes recommendations regarding the proposed priorities for the Competitiveness and Employment programme in England. ERDF The draft NSRF itself states that in England ERDF will focus on four objectives: • • • •
promoting innovation and knowledge transfer, stimulating enterprise and supporting successful business, ensuring sustainable development, production and consumption and, building sustainable communities.
The North West region agrees with these four broad priorities, which are all reflected in the Regional Economic Strategy. However there is concern within the North West about whether the additional regional priorities of infrastructure and accessibility would be eligible within the four objectives above. The need for further infrastructural investment in the North West to be able to connect areas of opportunity with areas of need was evidenced in the region’s response to the Regional Funding Allocations initiative. It is important that European funds would also be available to advance these regional priorities and that activities such as bus services to link poorer communities to areas of economic activity could be eligible either under the sustainable communities objective or through an additional objective. The three northern regions share common aims and priorities through the Northern Way growth strategy. The issues of accessibility and infrastructure are common across the regions and in this respect there is more in common with Scotland and Wales than with southern English regions. Both Scotland (para 151) and Wales (para 196) make provision for such priorities and we believe that flexibility should be allowed to the Northern regions to undertake activities in these areas which will help them meet the REP-PSA2 targets. The North West seeks regional flexibility regarding the activities the ERDF objectives will cover and recommends that Northern Way regions are eligible for the additional objectives of infrastructure and accessibility in order to facilitate achievement of its ambitions and the REP-PSA2 target. ESF For ESF the proposed objectives are: • •
Extending employment opportunities Developing a skilled and adaptable workforce
Although the proposed high-level priorities fit well alongside the RES and the Regional Skills Priorities, the North West is concerned that the NSRF examples are too restricted and concentrate too much on worklessness and Level 2 skills, which are seen by employers as basic skills, not intermediate skills as mentioned in the NSRF (para 78).5 Concentration on the worklessness agenda alone will not deliver the National Reform Programme focus (employment, and the five drivers of productivity – competition, enterprise, innovation, investment and skills). The RES shows a need for a more balanced programme which incorporates intermediate, higher level, sector specific (via SSCs/SSPAs), leadership, technical, management and entrepreneurial skills, which will help fulfil the Lisbon 5
According to TES March 2006 most employers view level 2 as a base skill.
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“better jobs” criteria. Therefore the NSRF needs to reflect the need for both priorities, especially workforce development (which is a key component of GVA), to address the National Reform Programme and RES priorities. Workforce development skills at all levels are complementary to current EU policy and critical to the achievement of the Lisbon agenda. The proposed limitation of ESF activity to just the two priorities seems to misinterpret the Commissions’ intentions and in contrary to UK government policy in regard to the importance of technical and higher level skills to the UK economy and regional regeneration. It also runs counter to widening participation from socially deprived groups in high value employment, which requires as a prerequisite technical and higher level skills provision. Scotland, Wales and Northern Ireland have all recognised this need and include higher level skills as an eligible objective – it is crucial that the English regions, particularly those with needs common to the devolved administrations, are able to be in line with this. The Extending Employment Opportunities priority should include an overt reference to social inclusion issues, particularly with reference to employability, and skills for life, and lifelong learning training available to all ages. The RES, the Regional Skills Strategy and Regional Skills Priorities should be at the heart of the region’s ESF activities and we seek assurance that the allowance for regional flexibility for ESF will mean we are able to incorporate capacity for intermediate and technical and higher level skills as mentioned above. Finally, we agree with the priority on sustainable development, production and consumption in ERDF. However there needs to be a strand in ESF to complement this priority to ensure that the knowledge and skills are available in the workforce to implement the ERDF priority. The NSRF should make explicit that ESF’s two main objectives can be supplemented by other objectives in line with the relevant Regional Economic Strategy/Regional Skills Priorities. In particular it should be made explicit that workforce development skills at all levels and skills for life may be included in the priorities for ESF. ERDF and ESF It is important for the development of the regions that there is synergy between the ERDF and ESF programmes. With the right strategic focus ESF can provide the skills for ERDF activity, and this type of linkage should be encouraged. The North West recommends that the ESF component delivers working linkages and mutual support with the ERDF component within a single regional programme.
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Question 3: Do respondents agree that the proposed priorities include a sufficient focus on the Lisbon Agenda? The North West welcomes the Lisbon Agenda and the alignment of the Competitiveness and Employment Fund with it. We believe this will focus the use of the funds in driving the EU forward as a key global competitor. We also believe that the proposed priorities – including our amendments in response to question two on ERDF and ESF objectives reflect the Lisbon Agenda. The European Council Conclusions of the 2006 Spring Summit which reviewed progress on Lisbon also reinforced the need for environmental protection and enhancement to go hand in hand with the pursuit of the Lisbon agenda. Therefore we also maintain that leadership in sustainable development is a key criterion in pursuing the Lisbon targets. Overall the priorities must provide a good balance between activities of economic, social and environmental objectives which are also reflected in the North West’s Regional Economic Strategy. As well as the Lisbon economic agenda, the new programme will need to address, and link to, the social inclusion and environmental agendas. Another area that is lacking in the NSRF is any reference to the issues of demographic change and how it will be considered in the priorities of the Structural Funds. This is a key issue in achieving the Lisbon goals and can have an effect on how ERDF and ESF are utilised. The North West acknowledges that the NSRF is proposing that spending will be supportive of the Lisbon Agenda if it fits into fourteen (for Competitiveness and Employment regions) of the Integrated Guidelines for Jobs and Growth. However we seek clarification on why Integrated Guidelines 11 and 12 concerning Research and Development and ICT are not listed in paragraph 21 of the explanatory text. Increasing and improving investment in R&D and facilitating innovation and take up of ICT are both regional priorities in the Regional Economic Strategy, and we believe consistent with the Lisbon Agenda. We are concerned about the lack of reference to ICT in the NSRF, and particularly its role in driving up competitiveness. The appropriate deployment of technology is essential to the successful delivery of the priorities cited in the NSRF. In fact technology as a prime European economic driver is at the core of the Lisbon and Gothenburg agendas and is critical to the support of enterprise, innovation, sustainability, skills and employment. The strategic framework should encourage ambitious European regions like the North West to continue to invest intelligently in technologies that raise competitiveness and promote cooperation with other European regions, to compete in the connected global economy. The NSRF therefore needs to go further than it does currently in recognising the importance of new technology in delivering the aspirations of EU25 over the next seven years. Clearer reference needs to be made in the NSRF to ICT and its “Lisbon” role in driving competitiveness. In particular the NSRF needs to spell out the importance of having the systems and expertise in place to make appropriate investments in technologies that deliver explicit elements of the priorities and ensure best practice pervades throughout the ERDF and ESF programmes.
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Question 4: Do respondents agree with the proposals in the National Strategic Reference Framework for ensuring consistency between Structural Funds Programmes and other EU policies and funding streams, in particular spending under the European Agricultural Fund for Rural Development (EAFRD) and the European Fisheries Fund (EFF)? Question 9: Do respondents have views on how to improve coordination between Structural Funds and domestic spending within England, Scotland, Wales and Northern Ireland? Question 10: Do respondents agree with the Government’s proposals to align ERDF spending with domestic programmes in England? What are respondents’ views on how best to achieve this? This North West welcomes the NSRF’s emphasis on strategy alignment and believes that the Regional Economic Strategy and Sub-Regional Action Plans, along with the Regional Spatial Strategy, HMR Pathfinders and the emerging Regional Rural Delivery Framework, must be fully recognised and utilised to create real added value. In general we support the co-ordination and alignment of: •
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Different European and domestic funding streams. Different European funding streams – ERDF, ESF, EAFRD and EFF
The North West agrees and welcomes the Government’s proposals to align ERDF spending with domestic programmes. This has long been an issue of great difficulty at regional, subregional and local level. However a more detailed discussion needs to take place on what alignment of ERDF with domestic programmes will mean for the involvement of RDAs and other potentially involved organisations. In addition the region will need to have more flexibility in the use of ESF. The National Reform Programme will provide much of the basis for the ESF Programme in England, however we would like to ensure that there is sufficient flexibility for regions and that they are able to use their own Regional Strategies for Skills to best target funding where it is most needed. In addition there must be synergy between the ERDF and ESF strands of the Structural Funds to provide a more holistic approach to the funding activity. The North West has a diverse geography including large cities and urban areas to remote rural areas, including 1000km of coastline6. We therefore see great added value in consistency between Structural Funds and Rural Development and Fisheries programmes. The region agrees that there should be clear demarcation criteria between EAFRD and the Structural Funds, and agrees with the suggested focus of activities for both, but stresses that the opportunity to access EAFRD funding, should not exclude the availability of ERDF/ESF funded activity in rural areas as the available funding for economic development and diversification remains low due to little progress on the modulation of rural funding. In addition, we wish to stress that ERDF and ESF also target rural businesses, and that these are incorporated within any programmes developed. Businesses in rural areas in the NW account for 40% of the business stock, 23% of regional GVA and 25% of employment. This shows the extent of businesses outside of conventional agriculture (i.e. farms), which accounts for just 3% of regional GVA. The role of the Rural Development Programme for England (RDPE) will address specific issues in rural areas (e.g. enhancing opportunity in rural areas) but has two major themes (accounting for approx 90% of available investment) on making agriculture and forestry 6
http://statistics.defra.gov.uk/esg/reports/capmtrp/appendix2h.pdf
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competitive and enhancing the environment and countryside (land management/agrienvironment). Consequently the more generic and baseline strategic support offered by ERDF and ESF for rural areas will be the bedrock on which the small levels of investment via RDPE (in comparison) can build on and thus maximise public investment. The region supports the comments concerning alignment with Local Area Agreement spending priorities for economic and environmental as well as health and social care spending in the region. The Health & Social Care sector, a key economic growth area, would particularly link to the ESF worklessness issue. The North West is a partner in the Northern Way. It will therefore wish to ensure consistency and alignment with the Northern Way growth strategy in the use of the Structural Funds. The North West believes that ERDF and ESF funds will have greater impact, both for the region and the UK economy overall, if they are concentrated on supporting economic development in the North of England where there is significant untapped potential for economic growth. The Cities and City Regions in the North are recognised as key economic drivers for the growth of the UK economy and have the potential to significantly close the national annual productivity gap of £30 billion between the North and the England average, which the Northern Way Growth Strategy seeks to address. There is a strong risk that any allocation methodology will continue to spread the EU funds too thinly, especially with limited Structural Funds resources and increased pressure on UK budgets. However, by taking the decision to invest more heavily in the North, the Structural Funds have the potential to increase the contribution of the North to the UK economy. With the added gains that the effective alignment with domestic activity, alongside simplified management and delivery arrangements could bring, this contribution could be significant. As stated in the NSRF a programme of simplification is underway around business support provision. In the 2006 Budget Report it states that “There is concern at all levels that the proliferation of business support schemes has created a complex picture [...] The Government will work with RDAs and other local and national bodies to reduce the number of business support services from around 3000 now to no more than 100 by 2010.” The North West agrees that any business support activity under the Structural Funds must link to the new arrangements and brandings. ERDF has been a significant cause of proliferation of business support and this new Programme provides an opportunity to achieve the Budget's objective. Clearly business support should also enable support for Social Enterprises and entrepreneurship – in line with UK policy. The North West will work to produce a single overarching document for Competitiveness and Employment funding in the region. The NWDA, NWRA, Sub-Regional Partnerships and Government Office will work together in close partnership with other relevant actors in the development of this document, building on previous successful collaborations. A more detailed discussion needs to take place on what the alignment of ERDF with domestic programmes will mean for the involvement of RDAs and other potentially involved organisations. There needs to be sufficient flexibility for regions so they are able to use their own Regional Strategies for Skills to best target funding where it is most needed. That there must be synergy between the ERDF and ESF strands of the Structural Funds to provide a more holistic approach to the funding activity.
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Question 5: Do respondents agree with the proposed architecture for future Programmes? The North West is in agreement with the proposed general “architecture” principles including that: • ERDF funding should be aligned with the RDA’s Single Pot; • Some funding should be channelled through those Local Area Agreements which have responsibility for enterprise and economic development; • The North West is eligible for Competitiveness and Employment funding, with Merseyside receiving ‘phasing in’ transitional funding; • Equality and environmental sustainability remain cross cutting themes, fully mainstreamed within the programme7; • Agree that there should be fewer, better, more transformational projects. The North West will develop a single ERDF Operational Programme for the region, reflecting the fact that for the first time the whole region will be eligible for Structural Funds under the same Competitiveness and Employment objective. The allocation for Merseyside will be ring-fenced within the programme as a ‘phasing in’ region, as will any special funds given to Cumbria. The North West will develop suitable regional arrangements under the overarching ESF National Operational Programme, which will incorporate the Merseyside ‘phasing-in’ ESF and any ring-fenced Cumbria ESF allocation. The Competitiveness and Employment Operational Programmes will contain a mix of regional/subregional and local activities as appropriate to the priorities of the region. It will be delivered through a single regional governance architecture, respecting the principle of partnership. The Regional Economic Strategy will act as the foundation for all investment. The RES is the region’s response to the Lisbon Agenda and we see the Competitiveness and Employment funds as absolutely vital in delivering the priorities. Other regional strategies e.g. Regional Spatial Strategy and Regional Skills Priorities will also contribute to the targeting of funding. This will lead to a balanced programme with regional, sub-regional and local arrangements all contributing to programme delivery. In addition the North West region in its Operational Programme will develop practicable governance structures that build on the partnership arrangements and current expertise in the North West (including those outside of existing Structural Funds). Key partners will include the NWDA, NWRA 8 (including their Social, Economic and Environmental Partners), Sub-Regional Partnerships and Local Authorities working with other emerging regional strategic co-ordination arrangements, including the North West Regional European Partnership. We also seek some clarity in regard to what the Government expects the role of Local Area Agreements to be concerning coordination and delivery of European funding and their interrelationship with the rest of the programme. We welcome the inclusion of equality and environmental sustainability as Cross-Cutting Themes, but regret that there is no clear reference to ICT and its role in driving competitiveness throughout the region. We would however seek guidance on using best practice from existing programmes to inform integration of Environmental Sustainability and Equality in all structures and processes of the new programmes. 7
See appendix 1 for detailed discussion of these issues The NSRF does not acknowledge the changes in regional structures since 1999. Partnerships have developed and regional alliances have given positive results. Examples include the recent successful collaboration between NWDA and NWRA on priorities for the annual £750 million Regional Funding Allocations for transport, housing and economic development. Another is the successful launch of the NW Regional European Partnership – a strategic partnership between NWDA and NWRA. 8
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The North West welcomes the continuation of Environmental Sustainability as a Cross Cutting Theme which is in keeping with the Government’s Sustainable Development Strategy (2005) and welcomes the inclusion of requiring Strategic Environmental Assessments of all programmes. However, the region maintains that comprehensive Sustainability Appraisals of programmes, incorporating the requirements of the Strategic Environmental Assessment Directive, are required to ensure they truly reflect sustainable development principles. Clarity is needed around the terms ‘sustainable development’ and ‘environmental development’. It is unclear in paragraph 27 whether the “integrated strategies for addressing environmental concerns and respecting the principles of sustainable development” include the social justice and community cohesion aspects of sustainable development. It may be more effective for Structural Fund Programme to develop an integrated strategy for equal opportunities and social inclusion and therefore include these issues in the Equality Cross Cutting Theme. The North West welcomes the explicit reference to Equality as a Cross Cutting Theme. This will be instrumental in preventing the growth of disparities between communities, and may address some issues of under-representation and segregation of groups such as women, disabled people, people from BME communities, older people etc. in business, employment and decision making roles. However, to fully address the intransigent issues of economic inactivity and to decrease disparities, active promotion of diversity as a tool for competitiveness is needed, and the long-term investment in social inclusion must be recognised as a benefit, not only to individuals and communities, but also to the economy as a whole. We would like to have strong commitment to ensuring all projects have to take account of the needs of local communities and/or constituencies they serve. It is also important that the ERDF capital and business support fund integrate equal opportunities, as well as ESF training projects. Programmes should have to develop integrated plans addressing equal opportunities and social inclusion in the same way as is proposed for Environmental Sustainability. We also maintain that the successful experience from EQUAL should also be integrated. The North West seeks clarification in the final NSRF on how the UK Government intends to incorporate the European Commission programmes of JEREMIE and JESSICA into future programmes. Finally, although the Government has made a firm commitment to the future Territorial Cooperation Objective, no explicit consideration is given in the draft NSRF to how the opportunity to carry out transnational activities within the Competitiveness and Employment Objective would be progressed nor to its alignment with ERDF and ESF activity. The value of exchanging experience and tackling shared development challenges with other European regions is fully recognised by the region. The significant opportunities for innovation and cohesion that the Territorial Co-operation Objective affords should not be overlooked.9 Governance arrangements for each region need to be able to build on existing strategic partnerships, recognising the potential of all partners including the Regional Assembly, Voluntary Sector, as well as Local Authorities and Sub-regional Partners. The Regional Programme will also recognise the ring-fenced allocation for Merseyside as a ‘phasing in’ region. We seek some clarity in regard to what we can expect of Local Area Agreements in regard to the coordination of European funding.
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For example in the North West through a cohesive Irish Sea programme
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We welcome the inclusion of equality and environmental sustainability as Cross-Cutting Themes, but regret that there is no clear reference to ICT and its role in driving competitiveness throughout the region. Equal opportunities and social inclusion should be included in the Equality Cross Cutting Theme. Programmes should have to develop integrated plans addressing equal opportunities and social inclusion in the same way as is proposed for Environmental Sustainability. The North West seeks clarification in the final NSRF on how the UK Government intends to incorporate the European Commission programmes of JEREMIE and JESSICA into future programmes. The opportunities presented by the Territorial Cooperation objective in developing innovation and cohesion should be mentioned in the NSRF. Question 6: Do respondents agree that the UK’s Competitiveness allocation should be divided equally between the ERDF and the ESF at the UK level? In the North West we are not aware of the evidence for the decision for a 50:50 split between ERDF and ESF at national level. Our view is that aligning with the REP-PSA2 target should be the key focus of EU Structural Funds and if this is only the case for ERDF then more than 50% should go into the ERDF fund at the national level (for example 70%). In addition ERDF covers a wider range of activities and as such a larger part of the Regional Economic Strategy. The only reason that 50:50 split could be acceptable is if ESF were also aligned to this target (as in our earlier recommendation). Of critical importance to North West is that there is a substantial and appropriate allocation from both ERDF and ESF, fitting to the needs of the region and the aim of the Competitiveness & Employment Fund, which is to address the gaps between the regions. As recommended elsewhere, the overwhelming majority of Competitiveness and Employment Funds should be allocated to those regions with GVA below 100%. It is vital, therefore, that the ratio of division between funds at national level must reflect the collective needs of the individual regions, not vice-versa. More than 50% (e.g. 70%) to go into the ERDF fund at national level, especially if only ERDF is to be aligned to the REP-PSA2 target and not ESF. Question 7: What are respondents’ views on how best to allocate ERDF Competitiveness funding across the UK’s regions? The North West welcomes the overall policy commitment for ERDF, which is “to make sustainable improvements in the economic performance of all English regions and over the long term reduce the persistent gap in growth rates between the regions.” Given this aim, which is consistent with the core aim of EU Structural Funds, it follows that the overwhelming majority of the ERDF funds must be directed at regions and nations with currently less than the UK GVA average. In other words, although it is clear that all English regions may receive a proportion of the Competitiveness and Employment objective, Bootle cannot be treated the same as Bedford, Carlisle not the same as Cambridge, Pendle not the same as Poole. The North West welcomes the £275-£310 million already earmarked for Merseyside as a ‘phasing in’ region, however we also seek a top slice of the national Competitiveness Fund for Cumbria, as the only UK region in economic decline, as well as a significant sums for
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Lancashire, Cheshire and Greater Manchester. There are also a number of region wide thematic priorities such as venture capital and environmental technologies. The North West region as a whole merits a substantial sum from the UK’s €6.2 billion Competitiveness and Employment Fund – at the level of £1.2 billion pounds in total. Not only should the criteria chosen be based on need - allocating support to the most underdeveloped regions of England - the North West further believes that that the allocation criteria should be readily understood, robust and transparent. The North West therefore proposes a basket of measures drawn from suggestions made by the European Council and by the Government, which will reflect both the purposes of the Structural Funds and the emphasis on delivering the Lisbon agenda. They are:
1. Population (European Council’s criteria) 2. Lack of prosperity measured by GVA per capita at regional level 3. Low Employment levels (European Council’s criteria) 4. % of workforce with low educational skills (European Council’s criteria) 5. Proportion of employees working in manufacturing 6. Business density (business per head of 1,000 population) 7. Lack of Innovation (using a basket of recognised measures of the knowledge economy and not relying solely on Research and Development)10 A basket of criteria should be used, drawing on both the Council recommendations and the Government’s suggestions, which will provide an allocation reflecting both the purpose of the Structural Funds including the Lisbon Agenda and meeting the needs of regions with GVA less than average - especially those in the Northern Way. The North West region as a whole merits a substantial sum from the UK’s €6.2 billion Competitiveness and Employment Fund – at the level of £1.2 billion pounds in total. Question 8: What are respondents’ views on how best to allocate ESF Competitiveness funding across the UK’s ESF programmes? The suggested allocation criteria for ESF are: • population, • labour market indicators (for example levels of unemployment, inactivity and worklessness) • and measures of qualifications (e.g. levels of qualifications of working age population). The North West supports these three allocation criteria but argues that there should be as high correlation between ESF and ERDF criteria as possible. Therefore the North West would urge the following are also used: • Lack of prosperity measured by GVA per capita • Lack of Innovation (using recognised measures of the knowledge economy):
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Taken from European Commission research: Policy Guidelines For The Regions Eligible for the New Competitiveness Objective: A Statistical Analysis Alessandro Sterlacchini, Polytechnic University of Marche, Italy. These statistics are available Europe-wide. a. Total R&D expenditures on GDP: average 1995-2002 b. Total European Patent Office applications per million inhabitants: average 1995-2002 c. Share of employment in high-tech manufacturing sectors: average 1995-2003 d. Share in employment in high-tech and knowledge intensive service sectors: average 1995-2003 e. Share in population aged 25-64 with tertiary education: average 2000-2001 f. Share of turnover due to products new to the firm: average 1996-98
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The North West wishes to see an additional allocation criteria for ESF in order to maximise the correlation between ERDF and ESF, in particular lack of prosperity measured by GVA per capita and lack of innovation (using recognised measures of the knowledge economy) – should be used. Question 11: Do respondents agree that ESF delivery arrangements should bring together ESF and domestic employment and skills funding in England to allow organisations to access a single funding stream? The North West agrees with the proposed ‘simplification’ of ESF and domestic employment and skills funding in England to allow organisations the opportunity to access a single funding stream deployed through Co-financers such as Jobcentre Plus and the Learning and Skills Councils. However, the existing arrangements should be widened and strengthened to include other organizations as co-financers with a legitimate role in this policy area, e.g. the RDA skills budget and the Trade Union Learning Fund could also be used to co-finance activity. This is a particularly important point for addressing the issue of regional flexibility within ESF. ESF funding has historically provided opportunities to be innovative, and fund activities complementing central government initiatives. This needs to be borne in mind in the final design of the programme, as co-financing could drive activities down a “more of the same” pathway. However in line with our recommendation that some ESF spend should be on technical and higher level skills - and the fact that JCP and LSC do not have a remit to provide or commission these - the region seeks some reassurance that the delivery arrangements are sufficiently flexible to ensure technical and higher levels skills, entrepreneurship, sector led skills etc., can be funded, particularly as level 4 and 5 skills are required for growth in the knowledge economy. This would require other co-financing organisations, or alternative arrangements controlled within the region running in parallel with co-financing. In addition the region will require an opportunity to determine spend to best tackle those priority areas important to the NorthWest. The North West welcomes the principle of co-financing and joining two funding streams into one, but is concerned that nothing has in fact been simplified for applicants and the systems are overly bureaucratic and difficult to access. We appreciate it may be due to required tendering arrangements, but if this is the case, we would recommend a return to original bidding model. North West agrees that ESF delivery arrangements should bring together ESF and domestic employment skills funding. The existing co-financing arrangements do not allow for innovation and sufficient flexibility and the regions seeks reassurance that the new arrangements can reflect regional and local needs. We would like to see regional flexibility to enable alternative arrangements to run alongside co-financing should this prove to be the most appropriate way forward for some ESF activity. In addition the region will require an opportunity to determine spend to best tackle those priority areas important to the North West.
22nd May 2006
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