ESIF Business Process and Simplification Nic Suggit Department of Communities and Local Government 24 April 2014

European Structural and Investment Fund Growth Fund Alignment ERDF ESF Parts of EAFRD All teams working together to create a system that is aligned across the funds. Numerous different groups working on parts of the business process (Inception to Funding Agreement, Contract Management, Compliance and Monitoring, Financial Systems), Reporting, Performance Management, Technical Assistance, CLLD, Financial Instruments. 2ESIF Business Process and Simplification

Drivers We have taken note of the following: Lessons Learned EC tightening compliance environment (Driven from the ECA) ERDF (and ESF) Interruption in payments Informal discussions with EC on the intent of the regulations and guidance 3ESIF Business Process and Simplification

Business Process Design Initial Success Criteria Complies with EC Requirements Aligns different funds (ERDF, ESF, growth part of EAFRD) Cost effective ‘Hides the Wiring’ where possible Business process specifies the IT system IT system streamlines process and reduces bureaucracy and complication Aligns audit and monitoring Compliant and Efficient payment and compliant ESF 4ESIF Business Process and Simplification

Business Process Design Principles Principles Complies with EC Requirements – built from the regulations, then EC guidance, then lessons learned and good practice – without gold-plating Aligns different funds – Standard design of forms, guidance and documentation on a common portal Cost effective – Right first time - Do task once - At the right time - As early as required Clarity - ‘Expose the Wiring’ so that the applicant is clear of the requirements from the outset Digital by default - (Application, Monitoring, Reporting) Coordinated monitoring and audit – avoid duplication and replication Standardised management information and reporting 5ESIF Business Process and Simplification

Challenges New delivery model – not simply a continuation of the status quo One Operational Programme (for each Fund) informed by 39 ESIF strategies Localism – a bottom up approach encourages diversity and potentially creates a more complex programme Local Enterprise Partnerships and the role of local partners – places emphasis on the importance of partnership relationship s working. Local sub-committee (LEP Area Partnership) Partners have strategic role while MA manages EC regulations, guidance and interpretations. Message about simplification alongside increasing complexity and emphasis of European Court of Auditors on greater compliance 6ESIF Business Process and Simplification

7 Growth Programme Board PMC Performance and Accountability Sub-Committee PMC Sub-Committees Thematic Cross Cutting Evaluation Communication TA Etc. Local Sub-Committees

Outline Application Stage One Local Implementation Plan Full Application Publish Call Funding Agreement signed Funding Agreement Applicant Managing Authority European Structural & Investment Fund High Level Business Process – Inception to Funding Agreement Promote and Publicise Call Review Outline and Prioritise Assess Outline against Criteria Full Technical Appraisal Review Full Application LEP Area Partnership 8

Deliver Operation Project Initiation Visit Applicant Managing Authority European Structural & Investment Fund High Level Business Process – Contract Management Performance Management and Monitoring On-the-Spot Monitoring and Verification Visits Closure Visit LEP Area Partners Administrative Checks and Claims Payments Operation Closure 9

Simplified Costs European Commission supports a simplified costs approach – see Article 68 of the Common Provisions Regulations. 10ESIF Business Process and Simplification

Simplified Costs – Common Provisions Regulations Article 68 - Flat rate financing for indirect costs and staff costs for grants and repayable assistance 1.Where the implementation of an operation gives rise to indirect costs, they may be calculated as a flat rate in one of the following ways: (a) a flat rate of up to 25 % of eligible direct costs, provided that the rate is calculated on the basis of a fair, equitable and verifiable calculation method or a method applied under schemes for grants funded entirely by the Member State for a similar type of operation and beneficiary; (b) a flat rate of up to 15 % of eligible direct staff costs without a requirement for the Member State to execute any calculation to determine the applicable rate; (c) a flat rate applied to eligible direct costs based on existing methods and corresponding rates, applicable in Union policies for a similar type of operation and beneficiary. The Commission shall be empowered to adopt delegated acts in accordance with Article 149 concerning the definition of the flat rate and the related methods referred to in point (c) above. 2.Staff costs relating to the implementation of an operation may be calculated by dividing the latest documented annual gross employment costs by 1650 hours 11ESIF Business Process and Simplification

Simplified Costs European Commission supports a simplified costs approach Each option has its own advantages and disadvantages. For the purpose of simplification, certainty and fairness, we favour a single model across the Fund for all simplified costs. We are currently weighing up the pros and cons of the various options 12ESIF Business Process and Simplification

Simplification Principles Complies with EC Requirements – built from the regulations, then EC guidance, then lessons learned and good practice – without gold-plating Aligns different funds – Standard design of forms, guidance and documentation on a common portal Cost effective – Right first time - Do task once - At the right time - As early as required Clarity - ‘Expose the Wiring’ so that the applicant is clear of the requirements from the outset Digital by default - (Application, Monitoring, Reporting) Coordinated monitoring and audit – avoid duplication and replication Standardised management information and reporting 13ESIF Business Process and Simplification

Next Steps Process and draft documentation and guidance agreed – June 2014 Test for compliance (and best practice, gold-plating) – July 2014 Finalise all documentation relating to: Calls for operations – July 2014 Outputs, Application and Appraisal – October 2014 Claims, Irregularities & Monitoring – January 2015 Support and Training for potential applicants and local partners – from October ESIF Business Process and Simplification

Questions and Observations What are the realistic expectations you have from simplification? Views on simplified costs? Any thoughts on how the points we have made can be improved with a focus on simplification? 15ESIF Business Process and Simplification