1. ESF Committee Brussels, 13 March 2009 Amendments to the General Regulation and the ESF Regulation
Thomas Bender
Employment, Social Affairs and Equal Opportunities DG
ESF Coordination

2. The European Recovery Plan 26 November 2008
As part of the European Economic Recovery Plan Commission proposed changes to Structural Funds Regulations
Changes to General Regulation, ESF and ERDF Regulation
Objectives:
to strengthen investment with a view to generating renewed growth and job creation
To accelerate and simplify implementation of OPs

3. Amendments to the General Regulation
Financial engineering:
Take a better account of the status of EIB and EIF when financial engineering operations are organised with the possibility to award them directly a contract (art 44)
Provide the possibility of in-kind contributions in the constitution or the contribution to funds or holding funds (art 56)
Strengthen the possibility of provision of TA by EIB and EIF (art 46)
Rules to accelerate the implementation of major projects (not applicable to ESF)
The proposed modifications are concentrated on four principal areas:
extending the scope of application of Article 44 relating to financial engineering instruments for the intervention of the EIB and EIF in support of Member States for the preparation and implementation of operational programmes;
an amendment to Article 56 relating to the eligibility of expenditure with a view to clarifying the possibility of payment of overheads on the basis of flat rates and to introduce the possibility of in-kind contributions being considered as eligible expenditure at the time of establishing - or contributing to – funds;
A modification of the dispositions relating to expenditure declarations: (i) for major projects with the removal of the prohibition from including incurred expenditures for such projects in interim payment requests before major project approval by the Commission and (ii) for State Aids within the meaning of Article 87 of the Treaty through the removal of the 35 % limit hitherto attaching to advances paid to beneficiaries by the body granting the aid, thus permitting advance payments of up to 100 %, other conditions remaining unchanged;
An increase in the third pre-financing instalment (2009) of 2 % for Structural Funds for those Member States that acceded to the European Union on or after 1 May 2004, the creation of a third instalment (2009) of 2,5 % for Structural Funds for all those Member States which had acceded to the European Union as constituted before 1 May 2004, in terms of the territorial co-operation objective, if the programme contains at least one participating Member State which acceded to the European Union on or after 1 May 2004, it is attributed an additional percentage advance of 2% in These additional resources which should be made available at the beginning of the year should be rapidly transferred to beneficiaries, taking due account of the rules of sound financial management.

4. Amendments to the General Regulation
More flexible conditions governing the reimbursement of advances in the case of state aids [Art 78 (2) (b)]
Clarifications on eligibility of expenditure related to specific provisions of the Funds [Article 56 (2) (b), Article 78(1)]
Additional pre-financing payment (+2,5% for EU12, +2% for EU10) for structural funds (Article 82)

5. Amendments to the General Regulation
Increased pre-financing to Member States if amendments agreed:
ERDF € bn
ESF € bn
Total € bn
EU 12
1,765
0,529
2,294
EU 15
2,568
1,234
3,801
Cross border
0,155
Total
4,488
1,763
6,251

6. Amendment to the ERDF Regulation
Modification of Article 7 of Regulation 1080/2006
Facilitate energy efficiency investment in buildings in all Member States
Focus on low-income households to foster social cohesion
Same options as ESF to manage grants
Modification of Article 7 as follows:
"For all Member States, expenditure on energy efficiency and the use of renewable energy in existing housing and in favour of low-income households is eligible provided that assistance is made available through public support schemes defined at national, regional or local level. Member States will inform the Commission of the national provisions that define low-income households."
Context:
Speeding up energy investment in buildings contributes to enhance Europe's sustainable growth potential, to promote EU competitiveness, to improve know how in the field of energy efficiency and renewable energies and to promote the European Energy Strategy objectives. Moreover, public investment in favour of low-income households confirms solidarity and ensures social cohesion in this period.
Although there is no EU competence, different EU policies have impact to housing. The decision to support energy investment in buildings, including social housing, lies within the competence of the Member States. Recently, the Housing Ministers on their informal meeting held in Marseille on 24 November 2008 stressed the importance and the need for such support.
In the current situation, at first stage is important to make possible the use of the EU financial support for this type of investments by providing all Member States with the appropriate legal instrument and, subsequently, to ensure the appropriate use of this facility by the Member States. Moreover, public support should be limited only to those households which are most in need.
The envisaged proposal promotes investment in the fields of energy efficiency and renewable energies which constitutes one of the core elements of the EU Energy and Climate Change Strategy and both constitute priority interventions under the ERDF.

7. Amendments to the ESF Regulation Background
ECA annual report: simplifying "the basis of calculation of eligible cost and making greater use of lump sum or flat rate payments instead of reimbursement of real costs“
Already exists in the Financial Regulation
Amendment:
4 options to manage grants cofinanced by ESF OP
2 already existing options: real cost, flat rate for indirect costs
2 new options: standard scale of unit cost, lump sums

8. Amendments to the ESF Regulation Rationale of the amendment
Introduce the options of lump sums and standard scale of unit costs in addition flat rate for indirect costs
How to use the options
Combination (no double financing)
Calculation: in advance on the basis of a fair, equitable and verifiable calculation
Capping of lump sums : € 50,000
 No change for existing rule of flat rate for indirect costs!

9. Amendments to the ESF Regulation Calculation of unit costs / lump sums
No method defined by the Regulation but conditions the methods will have to fulfil. Member States will decide on their method.
4 conditions to be respected: key issues for sound financial management
Established in advance
Fair
Equitable
Verifiable

10. Amendments: next steps State of play legislative process
Agreement reached very quickly in the SAWP. No change on the ESF proposal.
Feed back from EP positive, but concerned by 2 issues:
Should have been associated sooner
Concerned about sound financial management and the fact that it will be to the benefit of beneficiaries
Proposals are currently discussed with the European Parliament Opinions delivered last week, vote in early April, Entry into force April

11. Amendments: next steps Lump sums and flat rate for unit costs
Need to develop ESF guidance notes on the implementation of lump sums and on flat rate for standard scale of unit cost
Same principle as the note on flat rule for indirect costs, including some examples:
Use existing bases: information sheet to the Council, past experience of some Member States (mutual learning)
Exchanges within the TWG
Also applicable to ERDF: seminars of COCOF

12. European Social Fund More Info
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