Corporate report

Annual Implementation Report 2022

Published 25 February 2025

Applies to Northern Ireland, Scotland and Wales

CCI: 2014UK05M9OP001
Title: European Social Fund (ESF) England
Version: 2022.0
Date of approval of the report by the monitoring committee: 19 April 2023

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

2.1 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 0.88549.

At the end of 2022, committed spend for the 2014 to 2020 Programme was £2,948,108, 100,79.

Programme Focus

During 2022, the programme focus transitioned from implementation to delivery and a plan for closure.

A review of contract performance commenced in August 2022, which asked Direct Bid (DB) projects, that were not meeting the level detailed in their Funding Agreement (FA), to submit a Project Change Request (PCR) and invited DB projects to seek an extension and additional funding until December 2023, providing they met specific criteria.

Following this exercise, planning commenced on how we could utilise some of the identified underspend on the EC’s Fast-Care programme.

In November 2022, the ESF England MA submitted a revised 2014-2020 ESF Operational Programme (OP) to the EC for formal adoption. The EC approved the revisions and adopted the revised OP on 16 December 2022.

The revisions included

• updated unit costs to reflect current economic conditions
• revised the way results targets are monitored to make them more transparent (changing from percentage to volume targets in many cases)
• moving funds within the allocations for the Categories of Region (CoR) from relatively low demand areas to higher demand areas to ensure demand is balanced across the programme and reduce the risk of both over and underspend

The 2022 cumulative N+3 target was €2.82bn. Following focussed activity by the Programme, claims of €713m exceeded the 2022 N+3 target by €315.7m. or 11.2%.

Retention of staff resource has been paramount throughout 2022. Recruitment exercises continued with the aim to over recruit, in certain teams with high attrition rates, to protect operational delivery.

During 2022 Interim Payment Applications (IPAs) and Final Payment Application (FPA) totalling €1,162,861,989.44 were submitted and reimbursed, as follows:

• IPA22 submitted on 27/04/2022 for €341,303,467.11 total eligible expenditure. Reimbursed 21/06/2022
• FPA23 submitted on 29/07/2022 for €41,688,601.25 total eligible expenditure. Reimbursed 20/10/2022
• IPA24 submitted on 27/10/2022 for €542,325,813.05 total eligible expenditure. Reimbursed 21/11/2022
• IPA25 submitted on 16/12/2022 for €237,544,108.03 total eligible expenditure. Reimbursed 28/12/2022

Achievements

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

Participant Performance

Priority Axis (PA) 1 – O1

• Less Developed: 18,556 (78%) Actual Outputs against 2023 target of 23,880
• Transition (T): 277,736 (102%) Actual Outputs against 2023 target of 271,960
• More Developed: 865,807 (100%) Actual Outputs against 2023 target of 866,210
• Youth Employment Initiative (YEI): 104,367 (96%) Actual Outputs against 2023 target of 109,160

Priority Axis 1 – O2

• LD: 4,903 (70%) Actual Outputs against 2023 target of 7,040
• T: 31,381 (63%) Actual Outputs against 2023 target of 49,500
• MD: 124,209 (48%) Actual Outputs against 2023 target of 258,120

Priority Axis 2

• LD: 14,699 (120%) Actual Outputs against 2023 target of 12,290
• T: 146,828 (88%) Actual Outputs against 2023 target of 166,110
• MD: 330,099 (83%) Actual Outputs against 2023 target of 396,990

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 31/12/2022 of €71.m (58%) against a 2023 target of €122.5m
• T: Actuals declared to the EC by 31/12/2022 of €578.2m (72%) against a 2023 target of €797.6m
• MD: Actuals declared to the EC by 31/12/2022 of €1.95bn (70%) against a 2023 target of €2.79bn
• YEI: Actuals declared to the EC by 31/12/2022 of €308.3m (68%) against a 2023 target of €455.5m

Priority Axis 2

• LD: Actuals declared to the EC by 31/12/2022 of €36.5m (66%) against a 2023 target of €55.3m
• T: Actuals declared to the EC by 31/12/2022 of €299.5m (66%) against a 2023 target of €452.5m
• MD: Actuals declared to the EC by 31/12/2022 of €710.3m (62%) against a 2023 target of €1.14bn

Delivery Partners

A large proportion of provision is delivered through four national Co-Financing Organisations (CFOs). The MA has ensured that these partners are closely performance managed and in 2022 focussed on maximising performance as projects recovered after the pandemic. It also identified the need to decommit funds where it was clear that, in a small number of projects, they would not recover sufficiently to achieve 100% spend. This work will continue in 2023 to ensure that any available funding is recycled and utilised elsewhere in the programme.

Communications

Communications with ESF Grant Recipients, partners and wider audiences included regular publishing of ESF Action Notes and new, or updated, guidance on GOV.UK. Some communications reflected the completion of the transition back to pre-pandemic Business-as-Usual arrangements.

The MA’s annual information activity was the publishing in December of the ESF 2014-2020 Programme: case study booklet 2023,

It features a brief update on the Programme’s implementation and descriptions showcasing the breadth of project activity from across the country, with links to websites. Compared to past years there are more projects, with shorter descriptions.

Two other ESF communication activities showcased Programme activities and achievements:

In March the MA hosted a national online Celebration Event for stakeholders and delivery partners. Over 530 people dialled in on the day, which included presentations and films from Local Enterprise Partnerships, CFOs and Providers from across the country, plus speakers from Department for Work and Pensions (DWP). The event focused on the positive impact ESF support has in the lives of individuals, businesses and communities; and featured lessons and effective practice plus a look at priorities for the rest of the Programme. The event was available to view to mid-September.

Following this event, those who registered to attend were invited to submit their project details and links to websites, films and case studies to the MA, for inclusion in an ESF Programme Project Showcase document. There was a good response and in October the showcase, comprising over 70 projects, was circulated to event attendees.

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

3.1 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.

The final ESF Call closed in June 2021 and the Programme transitioned from implementation to delivery stage.

Examples of steps taken during 2022 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 085/22 issued in July 2022 extended the offer of Action Note 063/21 published in March 2021, inviting well performing projects to apply for additional funds
• the release of additional funds to CFOs – for example, a further c.£53m allocated to The National Lottery Community Fund (TNLCF) projects across England to extend activity in 2023
• in August 2022 the MA published Action Note 087/22 which explained that existing ESF Direct Bid projects that were not currently delivering to the level detailed within their Funding Agreement, or within the established 15% variance expenditure and or total participants, were required to submit a PCR. The PCRs were undertaken through a tranche-based approach with tranche timings being determined by project end dates. Therefore, those projects with earlier end dates will be in the earlier tranches and contacted in the first instance. Timescales for submission, subject to tranche were between 01/09/22 and 09/12/22

As a result, commitment by the end of 2022 in PA1 was £2,068,964,735.55.

2: Skills for Growth

Many of the actions taken and focus stated for PA1 were also appropriate for PA2.

The OP amendments included revisions to the unit costs, changes to the way results are measured and movement in finances.

Overall, money was moved out of PA3 (as a result of TASCO) and PA2, into PA1 to better respond to the demand placed there, due to current economic pressures.

As a result, commitment by the end of 2022 in PA2 was £826,966,404.43.

Commitment breakdown:

Direct Bid: £329,758,273.25
ESFA: £497,208,131.18

3: Technical Assistance

The MA established flat-rate financing for Technical Assistance (TA), using Simplified Cost Options (SCOs) in 2019, following entry into force of the regulation. Therefore, from this date all PA3 projects have changed to SCOs, and EC payment applications, for PA3, are only based on a 4% calculation of eligible expenditure in other priorities.

As reported in Annual Implementation Report (AIR) 2021, the MA has completed a claim-by-claim analysis, in line with EC guidance and clarification on additional management verifications, for all 174 claims previously excluded under Article 137(2) of the Common Provision Regulations, due to ongoing assessment.

This analysis was shared with AA (Audit Authority) for their follow-up audit of TASCO (AA-ESF1420-SYS47) and clearance of the last outstanding recommendation. All 3 authorities came to an agreement and final position on eligibility of the affected claims. The last recommendation was closed on 29 September 2022, and the Certifying Authority (CA) were able to reintroduce the majority of claims in a payment application submitted to the EC on 27 October 2022.

The 2021 to 2022 Annual Assurance Package, including AA’s Annual Control Report (ACR)8, provides further detail and assurance that this issue is now resolved. There is only 1 claim remaining, from the 174 previously excluded, that has been placed under ongoing assessment for irregular expenditure.

For completeness, the commitment by the end of 2022 in PA3 (for projects selected for funding prior to introduction of TASCO) was £51,126,521.27.

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 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.

Commitment by the end of 2022 in PA4 was £1,050,439.53.

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 tables9vi

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 8: The use made of cross-financing

These tables can be found within data tables 5, 6 and 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

4. 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.

Evaluation activity in 2022 has focused on developing our counterfactual impact analysis and the continuation of the second leavers survey. In terms of completed outputs, three reports delayed from 2021 were published in March, and a synthesis of evaluations completed to date was submitted in December meeting the requirement set out in the guidance.

Published outputs

In March 2022 three evaluation reports were published on GOV.UK:

• evaluation of the ESF 2014-2020 Programme in England: qualitative case study research
• ESF and Youth Employment Initiative (YEI) Leavers Survey Report 2016-2019
• Youth Employment Initiative - Impact Evaluation
• together these reports represent a substantive body of evidence of the effectiveness of the first half of the 2014-2020 programme. A synthesis of the findings was submitted to the Commission in December. The key messages and lessons learned drawn from these evaluations are: Programme effectiveness: Evidence to date strongly suggests that ESF and YEI has been effective in meeting its key objectives to help those furthest from the labour market to move closer to work, move into work or progress in work. This is evidenced both quantitatively and qualitatively in the evaluation. In particular, ESF and YEI has been effective in engaging its target audience with two thirds of participants experiencing some form of additional labour market disadvantage
• continuity: Targeting support through locally led strategic partnerships developed over several years and multiple programmes, appears to have been a driver of effectiveness in delivering the programme
• wraparound support: The additional, preparatory wraparound support, often delivered through a keyworker, for those experiencing labour market disadvantage that ESF/YEI has provided, continues to fill a gap in the employment support landscape, both for those not eligible for more mainstream support, those who require more help to prepare them for job search activity and those in-work who require additional support to progress

ESF project workers having more time to build trusting relationships and address barriers than is the case for some mainstream support is also a key factor

• tackling barriers: Even with the support ESF provides, those experiencing disadvantage remain less likely to achieve outcomes than those who do not. This is also the case for certain equality groups, notably older workers and those experiencing health or disability related barriers. However, ESF and YEI also appears to be effective in helping participants to acquire ‘softer’ skills by tackling these additional barriers, building confidence and moving them closer to employment through education, training or social inclusion activities.

The vast majority of participants were satisfied with the help they received and changed their perceptions and expectations of finding work in the future. Giving more recognition to these outcomes with less emphasis on achievement of ‘hard’ outcomes was a common plea made by projects in the research

Leaver’s survey

Fieldwork for the second leavers survey has continued throughout 2022. Survey responses have been lower than expected due to the sample volumes and quantity of participant contact details, particularly for the Youth Employment Initiative. The response rate (i.e., the proportion of leavers taking part in the survey who were contacted) has ranged from 21% to 24% across quarters which is consistent with the first leavers survey and is comparatively higher than surveys of participants in other current UK labour market programmes.

Response rates for the online element of the survey are much lower (1%-4%) but this still provides an efficient mode for topping up responses. In order to boost response volumes, we are planning additional samples and an extension of the fieldwork in 2023.

In November we received a first set of results covering the 2021+ period based on around 2,600 responses. While this is too low to analyse at sub-PA level it has provided a useful indicator of outcomes achieved in the wake of the COVID-19 pandemic and national lockdowns.

Responses were based largely on participants who finished in the 2021 calendar year, the first half of which was significantly affected by national lockdowns restricting the economy and labour market, in addition to the impact on delivery of ESF provision.

Encouragingly, employment outcomes have held up at pre-pandemic levels (around 4 in 10 or 41% of inactive or unemployed on joining ESF were employed six months after leaving) remaining comfortably over programme targets. Results for improved labour market situation are slightly down on the first half of the programme with 26% of survey respondents experiencing improved labour market status compared with 31% in 2016-2019.

One of the more striking findings in the new survey has been the fall in the proportion of participants reporting soft outcomes, for example around increased self-confidence or motivation. In 2016-2019 these results ranged from 70% to 80% but have fallen to between 60% and 70% in the 2021+ survey.

Using qualitative insights from the National Lottery Community Fund evaluation suggests changes in the mode of delivery to online and more focus on health and wellbeing in response to the effects of Covid-19 could explain this fall in the achievement of soft outcomes, especially due to their greater dependency on face-to-face and group activity.

On the other hand, the increase in online delivery has helped participants to learn new transferable skills relevant to job searching.

Use of administrative data for results indicators

As reported in the 2021 AIR, gaps in the leavers survey running due to the effects of COVID-19 and associated national lockdowns meant that for the first time we were able to use administrative registers to produce some long-term results indicators, specifically YEI CR11 and CR12 which measure the employment or self-employment status of participants six months after leaving.

Due to time lags in the availability of earnings data and the misalignment of the UK tax year to the ESF reporting year, we were only able to calculate YEI indicators for mid-2019 to mid-2020. We can now update indicators for mid-2020 to mid-2021.

The results, based on a sample of nearly 5,000 YEI leavers (representing 44% of all YEI leavers) between mid-2020 and mid-2021, show that approaching half (45%) of YEI participants were in employment six months after leaving and represents a recovery from the previous year (38%) and is consistent both with the first half of the programme and the strong employment performance results across the whole ESF programme collected in the 2021+ survey.

Meanwhile 3% of YEI participants were self-employed, consistent with the previous year. For both indicators, the employment rates for females (43% and 2% respectively) were slightly lower than for males (46% and 4% respectively), which follows the pattern of previous years.

Data to produce YEI CR10 (Participants in continued education, training programmes leading to a qualification, an apprenticeship or a traineeship six months after leaving) for the periods mid-2019 to mid-2020 and mid-2020 to mid-2021 remains unavailable until mid-2023.

Counterfactual Impact Evaluation

Work has continued throughout 2022 on Counterfactual Impact Evaluation of the national programme with results due in spring 2023. Progress has included approval of our methodology by external experts commissioned and part funded by Technical Assistance and internal assurance by the DWP Datalab who use similar methods to evaluate labour market interventions.

The increasing treatment group size and maturity of the programme now enables us to track impact for cohorts of participants for 3 years after they joined an ESF project. This will provide more robust evidence of the longer-term impacts of the programme than has been previously possible.

Early indications are that ESF has had a positive and additional impact on employment outcomes, supporting other evaluation evidence on effectiveness and outcomes.

Planned activity in 2023

Activity in 2023 will focus on completion of the impact evaluation and the leavers survey, which are the final two outputs in the evaluation FA. The impact evaluation is expected to be completed by mid-2023 with publication of the final report later in the year or early 2024, subject to Ministerial approvals.

The leavers survey fieldwork will continue late into the year to enable us to survey as many 2023 six-month leavers as possible, with final reporting in the first quarter of 2024.

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

For the duration of the 2014-2020 programme, levels of young NEETs ‘those not in education, employment or training’ in the UK have been falling, and while the COVID-19 pandemic had a substantial impact on youth unemployment and inactivity levels, these have now fallen below pre-pandemic levels.

According to the UK’s Office for National Statistics the percentage of all young people who were NEET in July to September 2022 was estimated at 10.6% down 0.5 percentage points compared with pre-COVID-19 pandemic levels (October-December 2019). This compares with levels of just over 13% at the start of the programme.

Source: Office for National Statistics

Young people not in education, employment or training (NEET), UK - Office for National Statistics

Estimates of young people (aged 16 to 24 years) who are not in education, employment or training, by age and sex.

Looking specifically at the situation in 2022 in England, the employment rate for young people aged 16-24 to the end of September 2022 was 53.3%, which is 2 percentage points higher than 2021 but remains slightly down on pre-pandemic levels (53.8%), while the unemployment rate of 10.8% is down 2 percentage points in 2021 and just under 1 percentage point on the pre-pandemic rate of 11.7%.

Meanwhile inactivity (40.2% at September 2022) despite falling by nearly 1 percentage point since 2021, remains above pre-pandemic levels (39.1%).

Source: Nomis – Official Census and Labour Market Statistics (nomisweb.co.uk)

Nomis – Nomis - Official Census and Labour Market Statistics

Nomis – official labour market statistics

The majority of young people who are economically inactive in the UK (74%) are in education Source: House of Commons Library – Youth unemployment statistics; applying this rate to England would mean there are still around 600K young people either out of work and not in full time education either.

It should also be noted that while employment rates for the 16-24 age group have generally been improving between 2021 and 2022, there are some signs of the unemployment rate increasing again in the final quarter of 2022 as the UK economy growth slows.

Looking at the regional picture in England, while most regions have seen improvements in employment, unemployment and inactivity rates over 2022, the North-West region, which includes YEI areas, has seen both the employment rate fall and unemployment and inactivity rates rise between 2021 and 2022, while the West Midlands, also YEI, has seen an increase in the unemployment rate.

Another indicator of young people’s engagement with the labour market is unemployment related benefits. While the number of young people in England claiming benefits has fallen from the dramatic doubling seen during the early part of the pandemic in 2020, the number of claimants recorded in January 2023, although a 15,550 reduction from January 2022, was still 36,595 (33%) higher than in January 2020.

However, this also includes a substantial increase in employed young people who became eligible for Universal Credit (UC) during the pandemic and which they can still claim provided they are earning below a defined threshold. Claiming UC also made them eligible for the Kickstart scheme discussed below (Source: Nomis - Official Labour Market Statistics.

A contributory factor to continuing relative recovery of the youth labour market in 2021 and 2022 has been the UK government Kickstart scheme, which was introduced in response to the Pandemic.

It offered paid jobs, for 6 months, to young people claiming UC. As of July 2022, published data showed that over 163,000 Kickstart jobs had been started by young people in England with a further 204,000 made available, although the scheme has now closed.

See Kickstart Scheme.

Taking these factors together with the winding down of YEI projects helps to explain the lower volumes of YEI participants in 2022.

A total of 104,367 participants were supported in 2022.

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 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.

AIR 2021 set out the potential flexibilities being explored with the EC. Those discussions have now concluded, and no further flexibilities were offered. As a result, the MA has explored the option of increasing funding to existing projects in the MD NUTS2 areas to absorb uncommitted YEI funds, but this has been unsuccessful due to regularity constraints, saturation, and lack of Match Funding.

Where they meet the published criteria YEI projects have been offered time extensions to maximise spend to support the recovery of performance after the pandemic and performance in YEI projects has shown some signs of recovery toward the end of 2022.

The MA continues to explore the potential use of YEI funds with one of the CFOs already delivering within the programme.

YEI Performance

The information below highlights key aspects of YEI performance in terms of immediate results on leaving the operation. A total of 104,367 participants were supported in 2022.

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

YEI CRO2               23,543         13,957          9,586              52,400         23,543

U/E receiving offer

YEI CR03               30,826        18,533          12,293              52,400 30,826   

U/E positive result

YEI CR05               8,778          5,021          3,757              10,820         8,778

LTU receiving offer

YEI CR06               11,154         6,457          4,697              10,820         11,154

LTU positive result

YEI CR08               13,017         7,433          5,584              9,400         13,017

Inactive receiving offer

YEI CR09              13,568          7,787          5,781              9,400         13,568

Inactive positive result

6. 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

Governance

The Programme’s Governance structure has been maintained throughout 2022 with most meetings taking place online and use of Written Procedure where appropriate.

A full Governance Review was conducted for the internal Programme Management Board (PMB) in April 2022. This gave more clarity to the Boards authority, streamlined the format, style and scheduling as well as proposed changes to the membership. The updated membership and Terms of Reference has enabled the Board to focus on the Programmes requirements regarding delivery, underspend and programme closure.

Remaining Funds (RF)

We reported in the 2021 AIR return that the last call was published in June 2021. This means that the RF are no longer being used as the basis for launching calls.

Instead, we are using R ends the programme might have if performance did not improve. This is the basis for activity the MA are undertaking to ensure there is minimal underspend. So, whilst the RF figure is still useful it is no longer going to be reported as a standalone figure as it now features as part of wider discussions around potential underperformance and activities to mitigate it.

Verification Checks

On-the-Spot Visits (OTSVs) continued to be completed using a desk-based system until February 2022. Where this desk-based 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. From February 2022, physical visits recommenced as business as usual. During 2022, the Verification Team welcomed 3 cohorts of new Verification Managers.

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, and to proactively manage the timely payment of claims internally.

In August 2022 the MA published Action Note 087/22 which explained that as the 2014-2020 ESF Programme is nearing its end, a key priority for the MA is to focus on projects to ensure they are spending their grant in time and in line with their financial and participant profiles.

Existing ESF DB projects that were not currently delivering to the level detailed within their FA, or within the established 15% variance expenditure and or total participants, were contacted by their Contract Manager and asked to submit a PCR. The PCRs were undertaken through a tranche-based approach with tranche timings being determined by project end dates.

Therefore, those projects with earlier end dates will be in the earlier tranches and contacted in the first instance. Timescales for submission, subject to tranche were between 01/09/22 and 09/12/22.

209 projects have submitted PCRs to address their Underperformance; appraisal action is ongoing.

Face to Face Contract Management Visits were resumed, however the option to be conducted virtually remains; visits are used to discuss performance and other concerns that the Contract Manager or Grant Recipient may have.

As notified in Action Note 068/21 the MA reverted to pre-paid Desk-Based Evidence Checks (DBECs) for Q3 2021 claims onwards. The residual post-payment DBECs for Q1 2020 to Q2 2021 (inclusive) claims was cleared by September 2022.

During 2022, the Contract Management team welcomed 3 cohorts of new staff to offset ongoing attrition rates. Two of the cohorts also included Senior Authorising Managers.

Project Inception Visits for all Direct Bid projects were concluded and all projects who had not previously done so were able to submit their first financial and subsequent claims.

Ongoing robust application of the Late Claim Process has seen a healthy reduction in the number of late claims submitted by Grant Recipients (GRs). Additional activity to introduce a pre-claim maildrop, reminding GRs of impending claim submission deadlines, and activities to take in preparation for submitting the claim has also contributed to this reduction.

As a result of the ongoing focus towards the end of the Programme, the claims backlog has been cleared and Contract Managers are able to focus on payment of the most recent quarter’s claims.

As a direct result of the reduction in outstanding claims, the number of financial corrections with pending offsets to recover the irregular expenditure have also reduced significantly.

Investigations

At the end of the 2021, the MA were made aware of an OLAF investigation and took delivery of the final report in January 2022. As a precautionary measure the CA removed from the accounts any claims that may be impacted by that report. The MA referred the case for the relevant CFO to review.

That work was completed, and the CFO have submitted a Learner Review Report to the MA. The MA has commissioned the Government Internal Audit Authority to investigate the issues raised by OLAF and quantify any ineligible expenditure within the claims currently on hold. That work has started. We will progress the resolution of this case as a priority. The claims affected remain excluded from the accounts until this action has been concluded. On receipt of the final report from Audit Authority AA), the MA will conclude all the necessary 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

During 2022, the MA continued to review all guidance and easements in line with the government’s ‘COVID roadmap’. The final ESF 2014 to 2020 Programme: Questions and Answers on COVID-19 Response was closed on 23/11/2022.

Underperformance

The MA continued to ensure that projects spent their grant in time and in line with their financial and participant profiles.

Action Note 087/22 issued on 10/08/2022 asked Direct Bid projects, that were not meeting the level detailed in their Funding Agreement, to submit a PCR.

Action Note 088/22 also issued on 10/08/2022, invited Direct Bid projects to seek an extension and additional funding until December 2023, providing they met specific criteria. 

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. Action Note 085/22 issued in July 2022, extended this offer. All extension requests were limited to no more than a 50% increase against the total value of the project’s Funding Agreement. Project extensions had to focus on the same type of provision, and to the same target group as the existing project and needed to ensure that no substantial changes were made to the scope of the revised project.

To be able to apply for additional funding, each project had to meet specific performance criteria. This criterion was agreed based on the project start date, in recognition of the impact COVID-19 may have had on project delivery, and the point during the project’s delivery timescales when this would have become a factor. Projects which started pre-COVID, for example, were anticipated to have been able to achieve a higher proportion of their contracted expenditure and output profiles than projects which started during the pandemic.

PCRs were received from 23 projects, seeking extensions and/or additional funding. Three applications were subsequently withdrawn, the remaining 20 have had their appraisals completed. Of the 23, 9 have been approved and the remaining 14 are moving through the appraisal process.

Community-Led Local Development (CLLD)

The MA introduced a formal CLLD Management and Administration (M and A) Reconciliation Process which ensures that a reconciliation of the final (overall) Public Expenditure is undertaken and that where ESF have responsibility for the M and A expenditure, it is within the 25% limit.

For co-funded projects (ESF and ERDF), verification and reconciliation of the actual Public Expenditure is to be completed by the respective MAs, using their own agreed process and then reported to The MA responsible for administering the M and A costs.

Closure Plan

The MA has continued to work actively on developing a structured plan for effectively and efficiently closing the Programme. A timeline showing the milestones to closure and a lower-level Closure Plan with individual and assigned tasks were formally tabled and accepted by the internal governance board, in September 2022.

The plan, timeline and our approach has been subject to an independent audit by the Audit Authority and received the Category 1 Unqualified assurance level. The plan and timeline are used as a key component to the continued delivery of the Programme and to ensure we are on course to meet all requirements necessary. This includes regular review at the internal senior management meetings each month and quarterly presentation to the programme governance board to alert members on progress.

7. CITIZEN’S SUMMARY (see separate document)

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.

8. REPORT ON THE IMPLEMENTATION OF FINANCIAL INSTRUMENTS

9. OPTIONAL FOR THE REPORT TO BE SUBMITTED IN 2016, NOT APPLICABLE TO OTHER LIGHT REPORTS: ACTION TAKEN TO FULFILL EX-ANTE CONDITIONALITIES

10. PROGRESS IN PREPARATION AND IMPLEMENTATION OF MAJOR PROJECTS AND JOIT ACTION PLAN (ARTICLE 10(H) ABD 111(3) OF REGULATION (EU) No 1303/2013

Significant problems encountered and measures taken to overcome them

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

10.1 Joint Action Plan

Progress in the implementation of different stages of joint action plans

Significant problems encountered and measures taken to overcome them

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

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

11.1 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

11.2 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)

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

11.4 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%

11.5 Role of partners in the implementation of the programme

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

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

Status

Name

Fund

Year of finalising evaluation

Type of evaluation

Thematic objective

Topic

Findings (in case of executed)

Follow up (in case of executed)

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

13. 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)

14.1 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

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

14.3 Progress in the implementation of any interregional and transnational actions

14.4 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.