Guidance

Annual Implementation Report 2021

Published 27 March 2023

Applies to England

CCI	2014UK05M9OP001
Title	ESF England
Version	2021.0
Date of approval of the report by the monitoring committee	11-May-2022

1. OVERVIEW OF THE IMPLEMENTATION OF THE OPERATIONAL PROGRAMME (Article 50(2) and 111(3)(a) of Regulation (EU) No 1303/2013)

1.1 Key information on the implementation of the operational programme for the year concerned, including on financial instruments, with relation to the financial and indicator data.

Throughout this report, unless otherwise stated, all commitment and spend by the Managing Authority (MA) is quoted in Sterling (£) and all commitment and spend against the Performance Framework (PF) is reported in Euros (€). The PF and Payment Application figures include National Match Funding and therefore represent the total expenditure. Where included within a Payment Application, all € values in this part of the report are as transmitted to the European Commission (EC) using the EUR Exchange Rate appropriate to that certified batch of expenditure. All other figures, where not yet included within any Payment Application, use the January 2022 EUR exchange rate of 0.8393.

At the end of 2021, committed spend for the 2014-2020 Programme was £2,967,004,053.82.

Programme Focus

Throughout the Pandemic, the European Social Fund (ESF) MA has worked closely with partners across government, stakeholders and the EC to develop measures that respond to the impact of COVID-19 on projects and their local communities.

Our focus has been on measures to help existing and new projects continue delivery of ESF by taking practical steps to adjust some activities and processes in line with emerging needs. To facilitate this, a range of easements were introduced in 2020. These easements were phased out during 2021, allowing the MA to return to pre-COVID-19 activities from October 2021.

Investment Priority (IP) 2.1 slowed down when employees were furloughed and unable to engage in longer-term skills activity. However, this was offset by greater demand in Priority Axis (PA) 1, with increased numbers of unemployed. The MA will therefore seek to transfer funds from PA2 to PA1 in the Operational Programme (OP) amendment due late 2022 to meet this change in demand and to consolidate the participant outcomes and results based on Actual costs.

The OP amendments of 2020 introduced the new PA4 to specifically fund support in response to the impact of COVID-19. A further PA4 Digital Intervention Call, under the same Lump-Sum Simplified Cost Option (SCO) as that of 2020, was launched in April 2021, however, it failed to attract any applications due to the requirement of the lack of Match.

The final ESF Funding Call closed June 2021, with the MA’s last Funding Agreement being signed in November 2021.

As more employers and educational establishments returned to Business-as-Usual procedures, a determined focus on the 2021 N+3 target ensured this indicator was exceeded by 2.91%.

During 2021 Interim Payment Applications (IPAs) and Final Payment Application (FPA) totalling €581,502,019.87 were submitted and reimbursed, as follows:

• IPA18 submitted on 29/04/2021 for €90,588,749.37 total eligible expenditure. Reimbursed 14/05/2021
• FPA19 submitted on 16/07/2021 for €62,613,437.99 total eligible expenditure. Reimbursed 02/08/2021
• IPA20 submitted on 07/10/2021 for €156,864,736.79 total eligible expenditure. Reimbursed 21/10/2021
• IPA21 submitted on 10/12/2021 for €504,761,038.51 total eligible expenditure. Reimbursed 29/12/2021

Achievements

The achievements by each Category of Region (CoR), for Participant and Financial indicators, against the 2023 final Programme target, are as follows:

Participant Performance

Priority Axis 1 – O1

• Less Developed (LD): 14,538 (61%) Actual Outputs against 2023 target of 23,900
• Transition (T): 236,917 (88%) Actual Outputs against 2023 target of 268,050
• More Developed (MD): 727,474 (83%) Actual Outputs against 2023 target of 874,430
• Youth Employment Initiative (YEI): 93,837 (85%) Actual Outputs against 2023 target of 110,490

Priority Axis 1 – O2

• LD: 3,953 (72%) Actual Outputs against 2023 target of 5,460
• T: 23,984 (44%) Actual Outputs against 2023 target of 54,120
• MD: 103,101 (38%) Actual Outputs against 2023 target of 270,130

Priority Axis 2

• LD: 10,781 (77%) Actual Outputs against 2023 target of 14,840 *- T: 115,170 (59%) Actual Outputs against 2023 target of 196,480
• MD: 260,255 (56%) Actual Outputs against 2023 target of 462,650

Priority Axis 4

• LD: 81 CV31 participants
• T: 399 CV31 participants
• MD: 1,222 CV31 participants

Financial Performance

Priority Axis 1

• LD: Actuals declared to the EC by 31/12/2021 of €37.5m (32%) against a 2023 target of €116.3m
• T: Actuals declared to the EC by 31/12/2021 of €416.5m (53%) against a 2023 target of €778.9m
• MD: Actuals declared to the EC by 31/12/2021 of €1.44bn (53%) against a 2023 target of €2.73bn
• YEI: Actuals declared to the EC by 31/12/2021 of €209.6m (46%) against a 2023 target of €455.5m

Priority Axis 2

• LD: Actuals declared to the EC by 31/12/2021 of €22.6m (37%) against a 2023 target of €61.3m
• T: Actuals declared to the EC by 31/12/2021 of €205.9m (44%) against a 2023 target of €469.3m
• MD: Actuals declared to the EC by 31/12/2021 of €522.9m (45%) against a 2023 target of €1.16bn

Delivery Partners

A large proportion of provision is delivered through four national Co-Financing Organisations (CFOs), the MA has, therefore, ensured that these partners are closely performance managed.

The work undertaken between the MA and CFOs in 2020 to extend projects, was continued in 2021 to local areas. This time the focus was to support the needs caused by the impacts of the Pandemic and to enable the commitment of remaining Programme funds. Existing projects who met the stringent criteria for ‘Well Performing,’ were invited to submit Project Change Requests (PCRs) to seek an increase in funding of up to 50% and or time extension to continue delivery to the end of December 2023.

Projects that did not meet the criteria are being closely performance managed to ensure they achieve their target outputs and deliverables, and conversations with those who are underperforming to return underspent funding are underway. 

The impact of the Pandemic caused major difficulties for projects getting people into jobs so some CFO projects sub-contracted on a Payment by Result model were temporarily amended to Actual Cost Models. The advice contained in Procurement Policy Notes governed these changes and those projects have now returned to the original contracted payment model as we return to Business-as-Usual.

Communications

Good communications remained a priority and these included publishing ESF Action Notes and new, or updated, guidance on GOV.UK. Phasing out of easements, restrictions, and transition back to pre-Pandemic Business-as-Usual arrangements were common themes. The MA’s 2021 ESF 2014-2020 Programme: case study booklet showcasing 38 ESF projects was published in December 2021.

The COVID-19 Response Q and A (published alongside ERDF) on GOV.UK has been accessed over 13,500 times since April 2020, with 2,691 of these accesses being in 2021. Overall feedback has been 90% positive which is proven in the reduction of its reliance.

2. IMPLEMENTATION OF THE PRIORITY AXIS (Article 50(2) of Regulation (EU) No 1303/2013)

2.1 Overview of the implementation

Priority axis

Key information on the implementation of the priority axis with reference to key developments, significant problems and steps taken to address these problems

1: Inclusive Labour Markets The MA continued to engage with delivery partners to commit the remaining funds, with 18 Calls being published for PA1 in 2021 resulting in 50 applications and £81,302,154 funds being committed. With the final ESF Call closing in June 2021, the Programme has now transitioned from an implementation to delivery stage.

Although Pandemic restrictions continued to impact the MA’s ability to process claims, the easements introduced in 2020 were phased out in 2021 as national restrictions were lifted.

Examples of steps taken during 2021 to drive performance and increase commitment levels include:

• significantly improved stakeholder engagement and joint working – such as, the creation of a Task and Finish group with our major partners, to focus on and review commitment of the remaining Programme funds

• the release of Action Note 062/21 in March 2021, which reminded Grant Recipients (GRs) that failure to submit their claims promptly is an ‘Event of Default’, and would lead to the MA enacting its rights to:

1. reduce the Maximum Sum, or
2. terminate the Grant Funding Agreement

• the release of Action Note 063/21 in March 2021, inviting well performing projects to apply for additional funds 21 PA1 projects applied and received funding of £20,173,279.98 (ESF)

• the release of additional funds to CFOs - for example a further c.£53m allocated to The National Lottery Community Fund (TNLCF) projects across England

As a result, commitment by the end of 2021 in PA1 was £2,053,210,042.82

2: Skills for Growth Many of the actions taken and focus stated for PA1 were also appropriate for PA2.

There were 12 Calls published against PA2 in 2021 resulting in 15 applications and £12,085,888 funds committed.

In response to Action Note 063/21, 8 PA2 projects applied (although 2 projects withdrew during the process) and received additional funding of £4,678,972.23 (ESF).

It should be noted that as a result of continued lockdowns and restrictions on business, the impact of COVID-19 on PA2 has been more significant than for other PAs.

Engagement with Small and Medium Enterprises (SMEs) in IP2.2 has been significantly impacted by the Pandemic and, as a result, many are changing the way they trade or operate. In addition, the services they provide have, in many cases, evolved to deal with the ongoing Pandemic and it is envisaged that this will remain the case for some time to come.

IP2.1 has suffered a slow-down due to employees being furloughed. The scheme, launched in March 2020, was designed to support employers to retain and continue to pay staff while businesses were closed. The scheme operated until September 2021, and has resulted in projects being unable to engage in longer-term skills activity.

However, this has been offset by greater demand in PA1, with increased numbers of unemployed. The MA will therefore seek to transfer funds from PA2 to PA1 during the OP amendment late 2022 in order to meet the increased demand.

As a result, commitment by the end of 2021 in PA2 was £881,943,210.81

3: Technical Assistance The MA took the opportunity to move Technical Assistance (TA) claims to the SCO model following the change to the Regulation. All PA3 projects now operate on this basis, and Payment Applications to the EC are based on a simple calculation of 4% of expenditure in PA1, PA2 and PA4.

Per the AIR 2020 submission, the MA reviewed all claims that were initially used to calculate the 4% TA SCO against the draft EC guidance for Additional Management Verifications (AMVs). The MA applied a deemed date for when AMVs were complete, and the Certifying Authority (CA) removed any expenditure under A137(2) from the accounts for any claims where the completion date could not be established until further clarification was received from the EC.

The EC published the TA SCO guidance in May 2021 and the Audit Authority (AA) completed a TA SCO Systems Audit at the end of year with a recommendation regarding the MA’s interpretation of AMVs. The MA queried this with the EC and have now been provided with a clear definition of when an AMV is deemed complete.

In response to the AA recommendation, the MA agreed to complete a claim-by-claim analysis of all claims previously excluded under A137(2), in line with the EC’s definition. Once this analysis is completed and advice is received from the AA, the CA will re-introduce all affected claims, with or without the 4% addition, in a future accounting period.

The AA’s Systems Audit of TA SCO and Audit of Accounts have confirmed the correct application of TA SCO for all other claims certified following adoption of the SCO model by ESF.

In response to Action Note 063/21, 1 PA3 project applied and received funding of £144,235.55 (ESF)

As a result, commitment by the end of 2021 in PA3 was £30,625,35

4: COVID-19 Response As reported in the AIR 2020 return, PA4 was introduced to address the two main issues associated with digital exclusion, which was exacerbated by the national lockdowns. These were, physical access to the internet via a device, and data.

Participants suffering digital poverty were able to gain access to online services and information, allowing them to continue accessing information digitally and helping them to stay engaged throughout COVID-19 lockdown restrictions.

In 2020, the MA and Greater London Authority (GLA) each launched calls for £5m ESF.

50 Applications were submitted with 20 projects going on to successfully deliver the required activity to support over 1,700 participants.

As a result of the success of the initial MA and GLA Calls, the MA launched a further Call in 2021, however, it failed to attract any applications in support of ESF participants.

Commitment by the end of 2021 in PA4 has, therefore, remained at £1,225,441.53

2.2 Common and programme specific indicators (Article 50(2) of Regulation (EU) No 1303/2013)

Priority axes other than technical assistance

Priority axis	1 - Inclusive Labour Markets
Investment Priority	8i - Access to employment for job seekers and inactive people, including the long term unemployed and people far from the labour market, also through local employment initiatives and support for labour mobility

Tables 2a, 2c, 4a and 4b can be found within data tables 8i

Priority axis	1 - Inclusive Labour Markets
Investment Priority	8ii - Sustainable integration into the labour market of young people (ESF), in particular those not in employment, education or training, including young people at risk of social exclusion and young people from marginalised communities, including through the implementation of the Youth Guarantee

Tables 2A, 2B, 2C, 4A and 4B can be found within data tables 8ii

Please note that table 8ii 2C contains no information as it is not applicable.

Priority axis	1 - Inclusive Labour Markets
Investment Priority	9i - Active inclusion, including with a view to promoting equal opportunities and active participation, and improving employability

Tables 2A, 2C, 4A and 4B can be found within data tables 9i

Priority axis	1 - Inclusive Labour Markets
Investment Priority	9vi - Community-led local development strategies

Tables 2A, 2C, 4A and 4B can be found within data tables 9vi

Priority axis	2 - Skills for Growth
Investment Priority	10iii - Enhancing equal access to lifelong learning for all age groups in formal, non-formal and informal settings, upgrading the knowledge, skills and competences of the workforce, and promoting flexible learning pathways including through career guidance and validation of acquired competences

Tables 2A, 2C, 4A and 4B can be found within data tables 10iii

Priority axis	2 - Skills for Growth
Investment Priority	10iv - Improving the labour market relevance of education and training systems, facilitating the transition from education to work, and strengthening vocational education and training systems and their quality, including through mechanisms for skills anticipation, adaptation of curricula and the establishment and development of work based learning systems, including dual learning systems and apprenticeship schemes

Tables 2A, 2C, 4A and 4B can be found within data tables 10iv

Priority axis	4 - COVID-19 Response
Investment Priority	9i - Active inclusion, including with a view to promoting equal opportunities and active participation, and improving employability

Table 2A and 2C can be found within data tables 4 -9i

Priority axes for technical assistance

Priority axis

3 - Technical Assistance

Tables 2C, 4A and 4B can be found within data tables 3

Table 5: Information on the milestones and targets defined in the performance framework

2.3 Financial data (Article 50(2) of Regulation (EU) No 1303/2013)

Table 6: Financial information at priority axis and programme level

Table 7: Breakdown of the cumulative financial data by category of intervention for the ERDF, the ERDF REACT-EU, the ESF, the ESF REACT-EU and the Cohesion Fund (Article 112(1) and (2) of Regulation (EU) No 1303/2013 and Article 5 of Regulation (EU) No 1304/2013)

Table 8: The use made of cross-financing

These tables can be found within data tables 5 to 8

Table 10: Expenditure incurred outside the Union (ESF and ESF REACT-EU)

Table 11: Allocation of YEI resources to young people outside the eligible NUTS level 2 regions

These tables can be found with data tables 10 and 11

3. SYNTHESIS OF THE EVALUATIONS

Synthesis of the findings of all evaluations of the programme that have become available during the previous financial year, with reference of name and reference period of the evaluation reports used.

The focus of the evaluations in 2021 has been to ensure that research plans disrupted by the Pandemic have been re-set to cover the remainder of the Programme.

While relatively little new evidence has become available, all key projects are now in progress. This includes:

• ongoing counterfactual impact analysis
• the new leavers survey and use of administrative data to monitor participant outcomes - the latter of which has been used to calculate some previously unavailable YEI results indicators; and
• starting work on the evaluation synthesis report due at the end of 2022

Additionally, evidence of the impact of the Pandemic on programme delivery has been published by TNLCF CFO.

Data collection for results indicators

The Participant Leavers Survey is the main source of data to calculate long-term results indicators. It is a representative sample survey of participants six months after they are recorded as completing an ESF or YEI project.

The first leavers survey was completed shortly before the start of the COVID-19 pandemic and the subsequent impact led to a 21-month delay in resuming the survey in November 2021.

To fill the gaps in indicator data caused by the pause in the survey, it was agreed with the EC that administrative data could be used in place of survey data where a suitable proxy could be identified. This would build on earlier work done by the ESF Evaluation team to explore the feasibility of using administrative data in place of surveys. This required that we could identify ESF and YEI participants in administrative data and that suitable proxies existed, for example being able to identify a participant’s employment status in a given month.

Progressing this work in 2021, we have been able to calculate annual YEI indicators CR11 (Participants in employment six months after leaving) and CR12 (Participants in self-employment six months after leaving) for mid-2019 to mid-2020. Data for mid-2020 to mid-2021 will become available later in 2022 and will be included in the next AIR report.

The results show that for mid-2019 to mid-2020, 37% of YEI participants were in employment six months after leaving. This compares with 43% in the previous year but could reflect the early impacts of the Pandemic on the labour market in the first half of 2020. Meanwhile 3% of YEI participants were self-employed, up from 2% in the previous year.

For both indicators, the employment rates for females (36% and 2% respectively) were slightly lower than for males (38% and 4% respectively), which follows the pattern of previous years.

For CR10 (Participants in continued education, training programmes leading to a qualification, an apprenticeship or a traineeship six months after leaving) we have identified a suitable dataset but cannot yet access the data for the time periods we need. This is currently the subject of an update of a data sharing agreement between the DWP and the Department for Education.

Using these datasets will also enable us to fill gaps in data needed to calculate the other long-term indicators (CR06 to CR09) required at the end of the Programme, and potentially to supplement survey data in sampling categories where response rates are too low to calculate indicators.

Evidence of impacts of the Pandemic on delivery

While evidence of the full effects of the Pandemic on ESF outcomes is still limited, a new report from the Building Better Opportunities (BBO) evaluation in 2021 (funded by TNLCF) provides insights into the impacts on delivery.

After the initial contraction in activity in the early period of the Pandemic when national restrictions were in force in spring 2020, the focus switched to how activity could continue remotely, with digital exclusion a key barrier. This was both in terms of access to equipment and internet as well as the required skills and knowledge to use them. Additional programme funding was made available to tackle these issues and, where challenges were insurmountable, project staff switched to providing support over the phone.

The research found that participants were largely happy with remote delivery and additional benefits included increased flexibility and reduction in travel, both for participants and staff. Staff also used social media effectively to keep in touch with participants and there was a greater focus on wellbeing and mental health as part of the support provided.

Data on outcomes collected by BBO shows that despite the Pandemic, rates of participants moving to positive destinations following support have held up, with around a third (35%) moving into employment and another third (31%) moving into education and training. The research also found that in the earlier part of the Pandemic, rates of exiting provision were much lower than previously, suggesting that staying in the provision helped to shield participants from the uncertain labour market conditions.

While the first half of 2021 saw further lockdowns in England, restrictions eased significantly from mid-year, and alongside a number of government labour market interventions known as the Plan for Jobs plus the job retention (also known as furlough) scheme, the UK labour market has recovered to near pre-Pandemic levels. Through the new leavers survey and impact analysis, more evidence will emerge in 2022 about the effects on ESF outcomes during this period. The new survey also includes additional questions on the effectiveness of digital support given to participants to help them to participate during national lockdowns.

Planned activity in 2022

The main activity in 2022 will be ongoing fieldwork for the new leavers survey, completion of the next stage of the counterfactual impact evaluation and production of the evaluation synthesis report, which is due by the end of the year.

The first impact analysis results of publishable standard are expected by the summer following assurance of the methodology and results from external experts. Further impact analysis will continue throughout and beyond the remainder of the Programme to track outcomes for participants for a minimum of two years after they have completed the Programme, thereby enabling us to quantify the longer-term benefits of ESF and establish the value for money of the Programme.

Publication of three outstanding reports (Leavers Survey 2016-2019, Youth Employment Initiative Impact Evaluation and Qualitative Case Studies) was postponed again owing to the continued backlog of research reports but were published on 2nd March 2022.  This formally completed 3 agreed outputs from the ESF Evaluation Technical Assistance project, leaving just 2 more to complete (the synthesis report due at the end of 2022 and the 2020-2023 leavers survey due in the second half of 2023).

4. INFORMATION ON THE IMPLEMENTATION OF THE YOUTH EMPLOYMENT INITIATIVE, INCLUDING FROM REACT-EU, WHERE APPLICABLE

Since 2012/2013 ‘not in education, employment or training’ (NEET) levels in the UK have been falling, and while the COVID-19 pandemic had a substantial impact on youth employment and inactivity levels, these levels are now at, or near, pre-Pandemic levels (Office for National Statistics, Young people not in education, employment or training (NEET)).

Looking specifically at the situation in 2021 in England (Source: People not in work Office for National Statistics), there has been an improving labour market for young people with levels of employment, unemployment and inactivity at, or near, pre-Pandemic levels by the end of the year.

Data shows that employment levels for the 16-24 age group were 55.1% at the end of 2021 (Oct-Dec 2021) compared with 54.9% at the beginning of 2020 (Jan-Mar 2020). Conversely, the unemployment rate has dropped for this group from 11.9% to 11.7% in the same period. Economic inactivity is now at a similar level (37.6%) to pre-Pandemic levels. The vast majority of young people who are economically inactive in England (around 8 in 10) are in education (Source: Official Labour Market Statistics, NOMIS).

The rates for England, however, mask regional variations, notably that unemployment rates are still higher than pre-Pandemic levels in 2 regions, London and the South-East, while inactivity rates have increased in 4 regions including the South-East.

In three of those regions both employment and unemployment levels remain lower than pre-Pandemic levels which can be partly explained by young people either staying in, or moving into, education or training (so are counted as economically inactive) during the Pandemic. This is supported by other published evidence (Youth Unemployment Statistics, House of Commons, February 2022) which shows this general trend at UK level. Another factor to note is that, in recent years, there has been a decline in population of the 16-24 age group.

Regarding unemployment related benefits, whilst the number of young people in England claiming benefits has fallen from the dramatic doubling during the early part of the Pandemic in 2020, the number of claimants recorded in January 2022 was still 63,000 higher than in January 2020, an increase of 33%. However, this also includes a substantial increase in employed young people who became eligible for Universal Credit (UC) during the Pandemic and who can still claim UC whilst working. This also made them eligible for the Kickstart scheme discussed below (Source: Official Labour Market Statistics, NOMIS).

A contributory factor to the relative recovery of the youth labour market in 2021 has been the UK government Kickstart scheme, which was introduced in response to the Pandemic. It offers paid jobs, for 6 months, to young people claiming UC. As of 31st January 2022, published data showed that 113,000 Kickstart jobs had been started by young people in England with a further 204,000 made available (Source: UK Parliament Written questions and answers. More than a third of these jobs are in London and the South-East where the current unemployment rate remains above pre-Pandemic levels.

Actions Taken

YEI rules state 90% of the funding must be spent in Nomenclature of Territorial Units for Statistics (NUTS) 2 areas where youth unemployment rates were above 25% in 2012. The remaining 10% is targeted at four NUTS3 areas where youth unemployment rates were above 30% in 2012.

To accommodate requests for more funding during the first lockdown, the MA used the flexibility provided in the CPR 1303/13 Article 25a to transfer funds from the MD Category of Region (CoR) to the T CoR in NUTS2 eligible areas.

There is currently £55m of uncommitted YEI funds in the MD Region of the NUTS2 areas that cannot be used. To address this, the MA has explored the option of increasing funding to existing projects in the MD NUTS2 areas to absorb this, but this has been unsuccessful due to regularity constraints, saturation and lack of Match Funding.

It is possible that a small amount of the remaining NUTS2 MD funds could be absorbed by the existing projects in that area (if we were able to extend beyond the current 50% limit), or potentially by projects in the NUTS3 area, if the EC reversed its decision of June 2020, to refuse our request to increase the 10% Cap in that area. However, this would still not take us to the full commitment level.

After consultation with stakeholders and following the EC’s advice, the MA wrote to the EC on 26th January 2022 seeking two flexibilities in order to commit more of the remaining YEI allocation within the Programme:

• the expansion of the ‘eligible’ areas, to cover additional geographies that were not included in the original list of 10 areas; and
• the ability for existing projects to be expanded beyond the current 50% increase limit (and the potential to also extend their geographic scope)

The EC sought further clarification on both points. The MA replied on 11th March 2022 seeking clarification from the EC on the possibility of decommitting a proportion of the YEI allocation and reallocating the subsequently imbalanced ESF match to fund non-YEI projects across England. A response to this request is becoming urgent as, should the EC agree to the MA’s request, the timeframe for committing these funds for reuse is reducing.

On reply from the EC, the MA will consider how to proceed, which will be reported in the AIR 2022 return.

YEI Performance

The information below highlights key aspects of YEI performance in terms of immediate results on leaving the operation. A total of 89,208 participants were supported in 2021.

Indicator Total Male (M) Female (F) Target Actual to date

Results (M+F)

YEI CRO2         20,992       12,452          8,540            39,192         20,992     

U/E receiving offer

YEI CR03         26,990       16,212        10,778            39,192         26,990     

U/E positive result

YEI CR05        7,686          4,402          3,284            10,955           7,686 

LTU receiving offer

YEI CR06         9,684          5,590          4,094            10,955           9,684

LTU positive result

YEI CR08        11,748          6,699          5,049              9,226         11,748  

Inactive receiving

offer

YEI CR09         12,108          6,922          5,186              9,226         12,108

Inactive positive result

5. ISSUES AFFECTING THE PERFORMANCE OF THE PROGRAMME AND MEASURES TAKEN (Article 50(2) of Regulation (EU) No 1303/2013)

(a) Issues which affect the performance of the programme and the measures taken

N+3

The 2021 cumulative N+3 target was €457,021,245m. Although there was sufficient expenditure within the ESF Programme to achieve this target, COVID-19 restrictions continued to impact the MA’s ability to obtain the level of evidence required for the full expenditure to be included in our IPAs/FPA, which resulted in the level of expected Payment Applications being lower than forecast in the first half of the year. However, due to focussed activity across the Programme, this was recovered later in the year and the target was exceeded by 2.91%.

Governance

The Programme’s Governance structure has been maintained throughout 2021 with the majority of meetings taking place online and use of Written Procedure where appropriate. This activity has been expanded further by utilising experienced external stakeholders, from the Performance and Disputes Resolution National sub-committee, to form a Task and Finish Group. The main aims of that group were to consider options and advise the MA on the most effective way of committing the remaining Reserve Fund (RF) allocation and ensure that it is used to target economic recovery during and following the Pandemic.

Reserve Fund and Calls

As reported in the AIR 2020 return the RF was temporarily paused during the early stages of the Pandemic. This allowed the MA to evaluate the impact of COVID-19 and consider the additionality of ESF. Since re-launching in June 2020, RF activity has focussed solely on COVID-19 economic recovery activities.

In 2021, 37 Calls, valued at £105,741,105 of ESF funds, were launched following proposals considered by the RF Panel. This included 7 Calls, valued at £25,712,500, that received no applications.

Areas across England reported a lack of available Match Funding, which was further compounded by the Pandemic and was cited as a reason for the lack of applications against some published Calls. In an attempt to reduce the number of Calls resulting in market failure due to lack of Match Funding, the MA continuously sought to identify sources, as well as local areas performing their own enquiries to secure its availability in advance of them submitting Call proposals to the RF panel. However, the MA recognises that this has been a challenging year for the market.

The MA published its last Call on 17th June 2021, and all appraisals have now been concluded.

Return to Business-as-Usual

The MA continually reviewed its offer of easements for GRs to bring the Programme’s delivery back to Business-as-Usual. To ensure projects had the latest information to continue delivering their activities, any amendments to those easements were publicised on GOV.UK or, where appropriate, in Action Notes.

Verification Checks

On-the-Spot Visits (OTSVs) in 2021 continued to be completed using a desk-based system. As reported in the AIR 2020, where this approach has been used the Verification Team has requested the same information as if it were an actual visit, with the evidence being received and reviewed via electronic means.

The Verification Team re-commenced physical OTSVs from early November. As the process to request information and plan for OTSVs takes approximately 4 weeks to complete ahead of the visit, only two were completed (on 9/12/21 and 10/12/21) prior to the reintroduction of lockdown restrictions. The process during the visits was conducted in line with pre-COVID-19 conditions, with the Verification Manager and GR adhering to a Health and Safety questionnaire that was completed by the GR prior to the visit.

Following the reintroduction of restrictions, the AA also resumed a desk-based approach to their A127 activity.

Contract Management

The MA has continued to improve its suite of contract management tools. These provide a more accurate report of projects’ actual achievement of financials and deliverables against their contracted profiles and help to identify and manage any underperformance more effectively.

A pragmatic approach in managing underperformance has been taken during the Pandemic. Those projects that can clearly evidence the specific impact of the Pandemic on their performance have, and will, be given time to recover performance where possible.

Contract Management Visits continue to be conducted virtually and are used to discuss performance.

Throughout 2021, CFOs have been given the opportunity to revise funding profiles and either release unused funds back to the MA or extend projects where appropriate. In some instances, Local Enterprise Partnership (LEP) areas took up the opportunity to extend CFO provision, whilst in others the MA chose to close underperforming projects so that the funding could be recycled and utilised more effectively through new Calls. Over the course of 2021, 53 CFO projects have been extended, with additional funds of c.£98m, and 15 projects did not extend with a value of c.£16m being returned to the Programme.

To encourage performance improvements, CFOs continued to support best practice by pulling individual projects together and organising learning forums. This has also aided the development of recovery plans for those projects struggling to meet performance by sharing best practice. In addition, some CFOs complete independent evaluations throughout the life of the Programme.

After each Verification Article 125 or Audit Article 127 activity, a summary of the findings is shared across CFOs’ projects so they are all able to implement recommendations and ensure a consistency of approach. Similarly, any themes or issues identified by those activities are discussed at both the monthly CFO meetings and the biannual CFO Performance Monitoring Meetings. This ensures that any actions required are discussed and progressed.

The LD Region has been hard hit by the challenges caused by the Pandemic and the remaining LD funds in the RF were released to support economic recovery plans. In response, CFOs continued to work closely with providers to improve performance by using SMART action plans, holding regular performance meetings, using Quarterly Reviews, and published Performance Management Points.

As reported in the AIR 2020 return, the Pandemic had a disproportionate impact on the T CoR. In response £100m was moved across from the MD CoR at the end of 2020. The additional money has been used to directly fund employment, social inclusion and skills support needs caused by the Pandemic and help to address local areas’ COVID-19 recovery plans. Sufficient funds remain in the MD CoR to continue to service funding requests from local areas within that Region.

Investigations

At the end of the year, the MA were made aware of an OLAF investigation with delivery of the final report expected in January 2022. As a precautionary measure the CA removed from the accounts any claims that may be impacted by that report. The MA will review the report and take the appropriate action.

(b) An assessment of whether progress made towards targets is sufficient to ensure their fulfilment, indicating any remedial actions taken or planned, where appropriate.

Easements

As stated above, with the continued impact of the Pandemic, the MA remained committed to working flexibly and pragmatically with its Delivery Partners and GRs.

All claims from Q1 2020 to Q2 2021 (inclusive) had Desk-Based Evidence Checks (DBECs) undertaken post rather than pre-payment. Earlier claims were also progressed under this easement where they met certain criteria. In addition, Project Inception Visits (PIVs) and Article 125 OTSVs continued to be delivered as desk-based, virtual visits, with evidence being requested electronically.

The MA continued to review all guidance and easements in line with the government’s ‘COVID-19 roadmap’ and, in July 2021, Action Note 068/21 confirmed the intention to revert to the pre-COVID-19 published claims process from Quarter 3 2021 claims onwards, and the arrangements for recommencing visits to projects, by both the MA and GLA, from October 2021.

Performance

The impact of the Pandemic on performance targets cannot be understated; due to employment opportunities being severely curtailed, many projects have seen a significant period of slow-down. In addition, the ability for projects to work with participants in group settings was withdrawn, many activities had to be redesigned, focussing on one-to-one settings, as well as virtual or online methods. The MA have been flexible in allowing projects to re-profile their outputs and results and have also been supportive in working with GRs to understand what can be delivered in the current climate.

Growth and employment levels have significantly changed, with some sections of the economy suffering considerable downsizing including Tourism, Hospitality and Retail. It is envisaged that recovery from the Pandemic will take some time. The MA is, therefore, considering ways it can work with projects to ensure they are back to their agreed profiles as soon as possible.

Although, as stated above, the MA have been flexible at individual project level, that same flexibility will need to be applied at Programme level. An OP amendment will be needed later in 2022 to revise the output and result targets, taking into account the changed economic environment and recognising the flexibilities proposed in the CRII and CRII+ Regulations.

PCRs

In March 2021, the MA published Action Note 063/21 confirming that the ESF PCR extension and additional funding process would replace Open Calls. All extension requests were limited to no more than a 50% increase against the total value of the project’s Funding Agreement. PCRs were received from 33 projects who met the criteria, seeking extensions in time and/or additional funding. 3 applications were subsequently withdrawn and the remaining 30 have had their appraisals completed.

Community-Led Local Development

The MA has conducted an exercise to jointly review the performance of all Community–Led Local Development projects with the Department for Levelling Up Housing and Communities. Recovery plans and/or PCRs have been received as appropriate which are currently being progressed.

6. CITIZEN’S SUMMARY

A citizen’s summary of the contents of the annual and the final implementation reports shall be made public and uploaded as a separate file in the form of annex to the annual and the final implementation report.

The Citizen’s summary is published alongside this report.

7. REPORT ON THE IMPLEMENTATION OF FINANCIAL INSTRUMENTS

8. Optional for the report to be submitted in 2016, not applicable to other light reports: ACTIONS TAKEN TO FULFILL EX-ANTE CONDITIONALITIES

Table 14: Actions taken to fulfil applicable general ex-ante conditionalities

Table 15: Actions taken to fulfil applicable thematic ex-ante conditionalities

Tables 14 and 15 can be found within data tables 14 to 15

9. PROGRESS IN PREPARATION AND IMPLEMENTATION OF MAJOR PROJECTS AND JOINT ACTION PLANS (Article 101(h) and 111(3) of Regulation (EU) No 1303/2013)

9.1 Major projects

Table 12: Major projects

Significant problems encountered in implementing major projects and measures taken to overcome them

Any change planned in the list of major projects in the operational programme

9.2 Joint action plans

Progress in the implementation of different stages of joint action plans

Table 13: Joint action plans (JAP)

Significant problems encountered and measures taken to overcome them

Tables 12 and 13 can be found within data tables 12 to 13

PART B

REPORTING SUBMITTED IN YEARS 2017, 2019 AND FINAL IMPLEMENTATION REPORT (Article 50(4), 111(3) and (4) of regulation (EU) No 1303/2013

10. ASSESSMENT OF THE IMPLEMENTATION OF THE OPERATIONAL PROGRAMME (Articles 50(4) and 111(4) of Regulation (EU) No 1303/2013)

10.1 Information in Part A and achieving objectives of the programme (Article 50(4) of Regulation (EU) No 1303/2013)

Priority axis

1 - Inclusive Labour Markets

Priority axis

2 - Skills for Growth

Priority axis

3 - Technical Assistance

Priority axis

4 - COVID-19 Response

10.2 Specific actions taken to promote equality between men and women and to prevent discrimination, in particular accessibility for persons with disabilities, and the arrangements implemented to ensure the integration of the gender perspective in the operational programme and operations (Articles 50(4) and 111(4), second subparagraph, (e) of Regulation (EU) No 1303/2013)

10.3 Sustainable development (Articles 50(4) and 111(4), second subparagraph, (f) of Regulation (EU) No 1303/2013)

10.4 Reporting on support used for climate change objectives (Article 50(4) of Regulation (EU) No 1303/2013)

Priority axis	Amount of support to be used for climate change objectives (EUR)	Proportion of total allocation to the operational programme (%)
Total	0.00	0.00%

10.5 Role of partners in the implementation of the programme

11. OBLIGATORY INFORMATION AND ASSESSMENT ACCORDING TO ARTICLE 111(4), FIRST SUBPARAGRAPH, (a) AND (b), OF REGULATION (EU) No 1303/2013

11.1 Progress in implementation of the evaluation plan and the follow-up given to the findings of evaluations

Status

Name

Fund

Year of finalizing evaluation

Type of evaluation

Thematic objective

Topic

Findings (in case of executed)

Follow up (in case of executed)

11.2 The results of the information and publicity measures of the Funds carried out under the communication strategy

12. ACTIONS TAKEN TO FULFILL EX-ANTE CONDITIONALITIES (Article 50(4) of Regulation (EU) No 1303/2013) (May be included in report to be submitted in 2016 (see point 9 above). Required in report submitted in 2017) Option: progress report

13. ADDITIONAL INFORMATION WHICH MAY BE ADDED DEPENDING ON THE CONTENT AND OBJECTIVES OF THE OPERATIONAL PROGRAMME (Article 111(4), second subparagraph, (a), (b), (c), (d), (g) and (h), of Regulation (EU) No 1303/2013)

13.1 Progress in the implementation of the integrated approach to territorial development, including development of regions facing demographic challenges and permanent or natural handicaps, integrated territorial investments, sustainable urban development, and community led local development under the operational programme

13.2 Progress in the implementation of actions to reinforce the capacity of Member State authorities and beneficiaries to administer and use the Funds

13.3 Progress in the implementation of any interregional and transnational actions

13.4 Where appropriate, the contribution to macro-regional and sea basin strategies

As stipulated by the Regulation (EU) No 1303/2013, article 27(3) on the “content of programmes”, article 96(3)(e) on the “content, adoption and amendment of operational programmes under the Investment for growth and jobs goal”, article 111(3), article 111(4)(d) on “implementation reports for the Investment for growth and jobs goal”, and Annex 1, section 7.3 on “contribution of mainstream programmes to macro-regional and sea-basin strategies, this programme contributes to MRS(s) and/or SBS:

• EU Strategy for the Baltic Sea Region (EUSBSR)
• EU Strategy for the Danube Region (EUSDR)
• EU Strategy for the Adriatic and Ionian Region (EUSAIR)
• EU Strategy for the Alpine Region (EUSALP)
• Atlantic Sea Basin Strategy (ATLSBS)

13.5 Progress in the implementation of actions in the field of social innovation, where appropriate

13.6 Progress in the implementation of measures to address the specific needs of geographical areas most affected by poverty or of target groups at highest risk of poverty discrimination or social exclusion, with special regard to marginalised communities and persons with disabilities, long term unemployment and young people not in employment including, where appropriate, the financial resources used

PART C REPORTING SUBMITTED IN YEAR 2019 AND FINAL IMPLEMENTATION REPORT (Article 50(5) of Regulation (EU) No 1303/2013)

14. FINANCIAL INFORMATION AT PRIORITY AXIS AND PROGRAMME LEVEL (Articles 21(2) and 22(7) of Regulation (EU) No 1303/2013)

15. SMART, SUSTAINABLE AND INCLUSIVE GROWTH (option progress report)

Information on and assessment of the programme contribution to achieving the Union strategy for smart, sustainable and inclusive growth.

16. ISSUES AFFECTING THE PERFORMANCE OF THE PROGRAMME AND MEASURES TAKEN — PERFORMANCE FRAMEWORK (Article 50(2) of Regulation (EU) No 1303/2013)

Where the assessment of progress made with regard to the milestones and targets set out in the performance framework demonstrates that certain milestones and targets have not been achieved, Member States should outline the underlying reasons for failure to achieve these milestones in the report of 2019 (for milestones) and in the final implementation report (for targets).

17. YOUTH EMPLOYMENT INITIATIVE (Article 19(4) and (6) of Regulation (EU) No 1304/2013 (where applicable))

The report submitted in 2019 shall set out and assess the quality of employment offers received by YEI participants, including disadvantaged persons, those from marginalised communities and those leaving education without qualifications. The report shall also set out and assess their progress in continuing education, finding sustainable and decent jobs, or moving into apprenticeships or quality traineeships.

The report shall set out the main findings of evaluations assessing the effectiveness, efficiency and impact of joint support from the European Social Fund and the specific allocation for YEI including for the implementation of the Youth Guarantee.

Documents

Document title	Document type	Document date	Local reference	Commission reference	Files	Sent date	Sent By
CitizensSummary_2021_v00a	Citizens’ summary	16-May-2022		Ares(2022)3963315	CitizensSummary_2021_v00a	26-May-2022	nglaradr