Guidance

European Regional Development Fund 2014 to 2020 Programme: Questions and Answers on COVID-19 Response

Updated 23 November 2022

Background

In March 2020, the Managing Authority (MA) published the below Q&A. This provided guidance to European Regional Development Fund (ERDF) grant recipients on the arrangements put in place to respond to the COVID-19 pandemic. This included the measures detailed in the European Commissions’ Coronavirus Response Investment Initiative (CRII) and Temporary Framework for State Aid.

On 21st February 2022 the government published its COVID-19 Response: Living with COVID-19 plan.

In line with the publication of this plan, the Q&A has been reviewed to provide an update for each question and give guidance for the future delivery of ERDF projects.

These updates include confirmation of which measures are to remain in place and where there will be a reversion to pre-COVID-19 arrangements, signposting to relevant guidance. 

ERDF grant recipients and delivery partners are invited to read the updated Q&A below and familiarise themselves with the position for future ERDF delivery.

Questions and Answers - First Published on 26 March 2020

Question 1

March 2022 Update - Closed

This question will close at 31/03/2022.

From this date forward, we will require all necessary supporting documentation in order to process claims. This includes claims already received and those received after 1st April 2022.

Will we continue to process Claims?

Yes. We recognise how important it is at this time of uncertainty for organisations to maintain cash flow and avoid unnecessary disruption to project finances. Where you are able, please submit a full quarter one claim along with supporting documentation as normal.

If you are unable to provide some or all of the supporting documentation (e.g. outputs upload, summative assessment, procurement register, assets information) please provide what you can; as a minimum your transaction list needs to be uploaded onto E-CLAIMS and a copy of the claim form provided.

If you are unable to meet the usual claims deadline please submit your claim as soon as possible, letting your contract manager know when you expect to submit information you have not been able to provide this time.

Documentary evidence:

We recognise that it may be difficult to gather some documentary evidence at this time. When your claim is received, your contract manager will notify you of the sample selected for documentary evidence checks. Where possible please provide the requested evidence. If this isn’t possible in the immediate future, we will not hold up payment of your claim, but we will contact you at a later date to ensure that the relevant information is provided.

The above applies to quarter 1 and 2 claims. We will review the need to extend these arrangements for a longer period as the position develops.

You must however ensure that you continue to maintain a complete and robust audit trail as claims will be verified/audited as usual at a later point and normal evidence requirements will apply.

Question 2

March 2022 Update - Closed

The Managing Authority recognises that COVID-19 has impacted delivery of ERDF projects.

The Managing Authority will work with Grant Recipients to determine the most appropriate and achievable way to manage any under achievement of finance and outputs/targets against profile.

The project will underspend in 2020, will this money automatically be lost to the project?

No. We recognise that it may not be possible for some projects to operate as normal and that this may impact on performance. We will work with you to reprofile finances and will also consider extensions to end dates to allow projects to catch up. However, it is not necessary to submit a Project Change Request form at this point, we will contact you to confirm when this is needed.

Question 3

March 2022 Update - Closed

The Managing Authority recognises that COVID-19 has impacted delivery of ERDF projects.

The Managing Authority will work with Grant Recipients to determine the most appropriate and achievable way to manage any under achievement of finance and outputs/targets against profile.

Will the project automatically be penalised if outputs cannot be delivered as a result of the impact of COVID-19?

No. As with finances we will work with you on a case by case basis to review profiles as necessary, but again it is not necessary to submit a Project Change Request form at this point. We will adjust your Grant Funding Agreement at a later stage to take account of any reduction in output levels that are the result of COVID-19. No penalty will be applied for reduced output levels that are agreed by the Managing Authority in line with the current ERDF performance guidance.

Question 4 - (added 08/04/2020)

March 2022 Update - Closed

The Coronavirus Job Retention Scheme ended on 30 September 2021. For staffing cost queries, Grant recipients should refer to the ERDF National Eligibility Rules and Programme Guidance published on GOV.UK - the main section being ‘Direct Staff Costs’.

Will ERDF continue to support project costs where activity has ceased or is temporarily suspended?

Please note salary costs cannot be covered where delivery has ceased or is temporarily suspended. Employers should be referred to the ‘Support for Businesses under the Coronavirus Job Retention Scheme’ in relation to covering salary costs.

If any organisations start to receive support from the UK Government for ERDF operations staff, then they need to inform the MA in order to avoid double financing that may result in ineligible expenditure.

It is important to note also that where employers choose to formally redeploy project staff to activity outside of the ERDF project, regardless of whether the project continues to deliver or is suspended, those salary costs are ineligible for ERDF support.

Question 5 - (updated 12/05/2020)

March 2022 Update - Closed

In June 2021 the requirement for summative assessment data monitoring forms was revised to an annual return to be submitted alongside Q1 claims. These will required in order to process the claim with which they are submitted.

Will we need to submit a quarterly summative assessment data sheet in order my claim can be paid?

Where these are available, you should continue to submit the data sheets. However, if it is not possible to submit them now the Managing Authority will process your claim on the basis that you will provide the required information at a later date.

The Managing Authority has introduced a ‘jobs safeguarded’ outcome to the summative assessment data sheet. This facility enables projects to capture additional benefits arising from ERDF support. Contact your Contract Manger for the new template and guidance.

Question 6 - (updated 08/04/2020)

March 2022 Update - Closed

For staffing cost queries, Grant recipients should refer to the ERDF National Eligibility Rules and Programme Guidance published on GOV.UK - the main section being ‘Direct Staff Costs’.

Will ERDF projects be able to cover the costs of staff should they fall ill due to the Coronavirus?

Yes. In line with the current national eligibility rules, if staff engaged 100% of the time on the project are certified or self-certified as sick, we will pay salary costs and contractual sick pay as normal.

If staff engaged 100% are in isolation and unable to undertake any project work and the employer is obliged to pay them, we will treat this in the same way as sick pay and cover the costs as normal.

Where staff time is only partially spent on ERDF projects using either the hourly rates or percentage methodologies these need to be applied using existing rules.

In line with Question 4, if project activity has ceased or is temporarily suspended or staff have been redeployed, costs relating to sick pay are not eligible for ERDF support since such will not be working on the project.

Question 7 - (added 08/04/2020)

March 2022 Update - Closed

The Coronavirus Job Retention Scheme ended on 30 September 2021.

Can ERDF be used to meet part of the 20% employer contribution to wage costs under the HMT scheme?

No. Where delivery has ceased and employers seek access to support under the Government’s Coronavirus Job Retention Scheme, ERDF will not contribute towards salary costs.

Question 8 - (added 08/04/2020)

March 2022 Update - Closed

For staffing cost queries, Grant recipients should refer to the ERDF National Eligibility Rules and Programme Guidance published on GOV.UK - the main section being ‘Direct Staff Costs’.

If staff are off sick, we are concerned at the impact this will have on the finances we can claim. Can we (a) increase the percentages claimed by other employees who are not currently claiming 100% of time and (b) can we bring in staff replacement cover (assuming we need a contract in place for them prior to them delivering)?

(a) Yes. Part time staff can increase their percentage to cover sick absence.

(b) Staff replacement cost is eligible usually for long term sick absence. However, given the current circumstances, short term replacement costs are eligible as long as there is a contract in place prior to the staff member delivering.

Question 9 - (updated 28/04/2020)

March 2022 Update - There are no further updates to this question and it is now closed

The European Commission is considering changes to regulations, for example state aid in response to the situation, must we follow the current rules?

The European Commission has adopted a series of flexibilities under CRII/ CRII+ and the Temporary Framework for State Aid in response to the current emergency.

HMG will continue to assess the proposed changes in consultation with the European Commission and we will update you should further changes be agreed. For example, see Question 17 for an update on our position with respect to ‘Undertakings in Difficulty’.

It should also be noted that the adoption of the Temporary Framework is not a signal that the Commission has suspended or relaxed wider State aid rules due to the COVID-19 outbreak. Rather, the Temporary Framework reflects the Commission’s recognition of the urgency needed in supporting citizens, businesses and companies facing economic difficulties as a consequence of the COVID-19 outbreak and has stated it will work ‘to ensure that possible national support measures to tackle the outbreak of the COVID-19 outbreak can be put in place in a timely manner’.

The Commission has also published revised procurement guidance. This recognises that a range of commercial actions might need to be considered by contracting authorities in responding directly to the impact of COVID-19 and that in such exceptional circumstances, authorities may need to procure goods, services and works with extreme urgency.

Crown Commercial Services have published several Procurement Policy Notes.

It is important to note that from an ERDF perspective, as the flexibilities relate directly to the COVID-19 response, it’s unlikely to be relevant for the vast majority of procurements undertaken by ERDF projects, so the existing rules will continue to apply in all but exceptional circumstances.

Question 10 - (updated 02/06/2020)

March 2022 Update - Closed

As Coronavirus restrictions have been lifted in England, we would not expect further requests to repurpose ERDF projects.

Any proposals to change project activity should first be discussed with your Managing Authority contact The below exclusions would still be in effect and all activity would need to be consistent with the Operational Programme and associated eligibility rules.

Can we change our project activity under current rules to help businesses respond to the situation?

Yes. The Managing Authority welcomes proposals from grant recipients to re-purpose their project so it is better placed to support businesses in the current economic crisis where activity remains in line with the Operational Programme and associated eligibility rules.

Grant recipients should note that re-purposing cannot include:

• Activities not eligible under the project’s Priority Axis or activities covered by other Priority Axes;
• Use of ERDF mainstream funding to support businesses with working capital (which is supported by ERDF Financial Instruments and the government’s loan guarantee and equity schemes);
• Funding to businesses for the payment of wage subsidies except where such arrangements are already agreed activities under the project, for example as part of a defined knowledge transfer/ graduate placement or comparable project workstream;
• Activities which would duplicate existing provision. Grant recipients should consult with their local growth hub for information in that regard;
• Activities which would contradict, duplicate or undermine HM Government domestic initiatives.

The above sets out the initial broad framework under which re-purposing will be considered: it does not guarantee that your proposal will be approved.

Proposals should be discussed with your contract manager at the Managing Authority, in particular to confirm whether the proposals would require the submission of a Project Change Request.

The Managing Authority is exploring the scope for further flexibilities to enable projects to have wider opportunities to re-purpose taking account of the Coronavirus Business Interruption Loans Scheme and the wider range of support such as the Coronavirus Job Retention Scheme, Self Employed Income Support Scheme and cash grants that MHCLG have made available to local authorities.

The MA’s intention is for repurposing to prioritise non-financial support such as the provision of advice, business support and guidance, rather than seek an immediate expansion of support for working capital in SMEs under mainstream ERDF provision.

Question 11 - (updated 28/04/2020)

March 2022 Update - Closed

The use of electronic signatures is allowable for the remainder of the programme.

This includes digital copies of hard copy documents bearing wet signatures or the use of appropriate electronic signing platforms. All electronic signing platforms should comply with the requirements of ESIF-GN-1-008 ERDF Document Retention Guidance.

An electronic image of a wet signature pasted into a document is not acceptable.

Grant recipients need to ensure that any support provided to beneficiaries, regardless of the delivery method, is consistent with national eligibility rules and the operational programme and addresses a genuine business need established through a diagnostic or other assessment.

Where electronic systems are able to provide evidence of participant data, for example attendance at a webinar, this would need to include a unique event id, participant details including e mail address and the date and time they joined and left the event. The host should sign a copy of the form to confirm that they believe it to be a true and accurate record of the event.

Can we change how we deliver the project activity?

Yes. If you wish to adopt remote delivery such as remote or online methods or make other changes to how you deliver the project this is fine. During the crisis we will accept electronic evidence of support if it is not possible to provide hard copies and ‘wet’ signatures.

The following are acceptable forms of electronic signature:

• Virtual signing - print off the signature page and sign the relevant section. Make a PDF or take a photograph of that signature page and send it by email; or
• Use of appropriate platforms - you can use an electronic signing platform like DocuSign or Adobe Sign. Alternatively check what electronic system your organisation uses and ask for access. Bravo and others can be used to sign contracts and documents electronically.

An electronic image of a wet signature pasted into a document is not acceptable.

This applies to both grant recipients and final beneficiaries who are evidencing any support they have received.

Question 12 - (added 08/04/2020)

March 2022 Update - Closed

Where projects have incurred cancellation fees and other costs related to event bookings that cannot go ahead due to local COVID-related restrictions, such costs can be considered as eligible expenditure and will need to be evidenced.

However the project should have exhausted all possibilities to claim the expenditure incurred by other means e.g. insurance. If the project can obtain a partial repayment, only the remaining costs are eligible.

Would cancellation fees be eligible?

Where a project incurs costs for activities that could not be delivered due to events or decisions beyond their control (e.g. meetings are cancelled by third parties or following Government advice), that expenditure will be eligible from 1st February 2020 as long as the MA is assured that reasonable steps have been taken to minimise that cost, that costs cannot be reimbursed from other sources and clear evidence is maintained of the payment and cancellation status/circumstances.

Question 13

March 2022 Update - Closed

Any costs included in grant claims should meet ERDF eligibility requirements and would need to be essential for project delivery.

If we need additional IT to support remote working is that an eligible cost?

Yes. If you need additional equipment or software to allow project staff to work remotely this may be included in grant claims. Please advise your contract manager if this is required.

Question 14

March 2022 Update - This question is now closed and projects should continue to contact their Contract Manager or other Managing Authority contact with queries

How do I inform and get agreement from the Managing Authority for any changes set out in this note?

In the first instance you should contact your Contract Manager by email clearly setting out all of the changes you anticipate as far as you are able. Your Contract Manager will consider and indicate Managing Authority consent (where possible) in email form. There will be no requirement for a project change request until specifically notified.

Question 15

March 2022 Update - This question is no longer relevant and is now closed

Submission of ERDF Full Applications: In respect of current applications will our ERDF application be deselected if we fail to meet the application submission date?

We recognise it will be difficult for some projects to meet the current deadlines. Where you are able, please submit your application by the agreed deadline. If you are unable to meet the deadlines please contact your nominated appraiser, we will consider extensions on a case by case basis.

Question 16 - (updated 07/07/2020)

March 2022 Update - The flexibility to temporarily increase ERDF intervention rates was limited to the accounting year 2020/21 and this question is now closed

How is MHCLG responding to the European Commission’s €8bn Coronavirus Response Investment Initiative?

The Commission’s Coronavirus Response Investment Initiative (CRII) and CRII + provide a welcome package of flexibilities for the use of European Structural and Investment Funds in response to the economic impacts of COVID-19. Measures to vary ESI Funds intervention rates, spending levels in Priority Axes and other flexibilities, such as the release of existing €8bn of ESI Funds pre-financing, provide a range of opportunities for different sets of circumstances in the UK and individual EU Member States. Managing Authorities across the UK are working rapidly to consider the opportunities that will be of most benefit for each programme, alongside the Government’s economic support package and the EU’s Temporary State Aid Framework.

MHCLG is implementing the flexibility offered under CRII to increase the ERDF intervention rate in specific cases and for a temporary period.

In applying the flexibility MHCLG will focus this on COVID-19 response activities that address priorities across the country (e.g. the Reopening High Streets Safely Fund described below) or business support projects that are reliant on SME match funding for key project activities.

In cases where MHCLG increases the rate at which grants can be paid in business support projects, this will reduce the amount of match funding required from SMEs.

Grant recipients who would like more information on how the flexibility may be applied should contact their contract manager in the local Growth Delivery Team.

Requests to increase SME intervention rates will be considered on an exceptional basis only and within a number of parameters, including:

• There will be no increase in the amount of ERDF granted to the project.
• Grant recipients who have provided evidence of their own or a third party’s commitment of match funding are required to maintain that level of investment.
• Higher intervention rates are limited to costs defrayed by projects in the remainder of 2020, in the case of grants to third parties a higher intervention rate may be applied to grants awarded before the end of 2020 and paid between January and March 2021.
• Projects return to the original ERDF intervention rate when the flexibility ends.
• Demonstration of the need for a higher intervention rate and a clear link to the impact of COVID-19 e.g. evidence that SME beneficiaries are currently unable to provide the anticipated level of match funding.
• State aid can be awarded compliantly.

Question 17 - (updated 24/07/2020)

March 2022 Update - Closed

This is a permanent change applicable for the remainder of the programme period. ESIF-GN-1-003 ERDF Eligibility Guidance has been updated to incorporate these changes and projects should ensure they have read the updated guidance before offering support to beneficiaries

Can ERDF support undertakings in difficulty (UiD) as a result of the Coronavirus pandemic?

Yes, where ERDF activity is operating in line with the De Minimis Regulation (EU No 1407/2013) or under the provisions of the UK umbrella scheme COVID-19 Temporary Framework for UK Authorities notified as part of the EU Temporary State Aid Framework. Read more detail on the Temporary Framework and at Question 18.

Previously, the ERDF Regulation(1) precluded ERDF support for UiD. In April the EU adopted changes to ESIF Regulations as part of its response to the Coronavirus pandemic. The amendments made under the CRII+(2) package amended the ERDF Regulation to make it consistent with the De Minimis Regulation(3).

This means that from 23 April 2020 it is possible for ERDF to support SMEs experiencing difficulties as a result of Coronavirus outbreak if project activity is operating in line with De Minimis support. This is a permanent change applicable for the remainder of the programme period.

Any Grant Recipient seeking to use De Minimis to support UiD should also:

• Satisfy itself that use of De Minimis is appropriate/compliant in respect of the proposed project activity,
• Notify the MA of the proposed change in state aid route - changes to the state aid route will require formal variation to the grant funding agreement,
• Ensure it maintains the appropriate documentation to evidence compliance with the De Minimis Regulation.

It is important to note that ERDF activity operating under the General Block Exemption Regulation (GBER) (4) notifications must continue to meet the relevant provisions which exclude support for UiD. In effect, neither the CRII amendments nor the Temporary Framework impact on GBER, which will continue to operate under business as usual conditions.

(1) Regulation EU (1301/2013) (2) Regulation EU (2020/558) (3) Regulation EU (1407/2013) (4) Regulation EU (651/2014)

Question 18 - (added 24/07/2020)

March 2022 Update - Closed

As of March 2022 the temporary framework is due to end at 30 June 2022.

Use of the Temporary Framework continues to require a variation to the ERDF grant funding agreement and any grant recipients wishing to use the temporary framework must continue to follow the guidance set out below.

Are projects automatically covered by the Temporary State Aid Framework established in response to the Coronavirus emergency?

Not automatically - The Temporary Framework is an additional state aid scheme with its own implementation rules/requirements. Use of The Temporary Framework is confined to the notified UK umbrella scheme COVID-19 Temporary Framework for UK Authorities, it does not apply to, nor can it be used in respect of, any other state aid scheme.

The Temporary Framework can only be used when:

• There is a direct causal link between COVID-19 and the project activity; and
• Aid is strictly limited to compensating only for the damages caused; and
• There is no cumulation with other aid for the same costs.

An amendment to the Temporary Framework adopted on 29 June 2020 permits support under the Framework for micro, small and start-up businesses in the context of COVID-19. The amendment means that micro and small businesses (undertakings with less than 50 employees and less than EUR 10m annual turnover and/or annual balance sheet total) can benefit from the Temporary Framework and therefore the UK umbrella measure (SA.56841) even if they were in financial difficulty on 31 December 2019. This will apply, unless such companies are in insolvency proceedings, have received rescue aid that has not been repaid, or are subject to a restructuring plan under State aid rules.

It is important to note that use of the Temporary Framework will require a variation to the ERDF grant funding agreement. Any ERDF Grant Recipient electing to use the temporary framework must:

• Satisfy itself that use of the Temporary Framework is appropriate/compliant in respect of the proposed project activity,
• Notify the MA of the proposed change in state aid route - changes to the state aid route will require formal variation to the grant funding agreement
• Ensure it maintains the appropriate documentation to evidence compliance with the Temporary Framework, including notifying BEIS of its intent to use the Framework and complying with any separate reporting requirements that BEIS requires.

Question 19 - (added 02/06/2020)

March 2022 Update - Closed

This is a clarification of the existing eligibility guidance

Can ERDF Financial Instruments support retail, hospitality or leisure businesses?

Yes. Loans or equity investment via an Access to Finance Financial Instrument into retail, hospitality and leisure businesses is eligible where this meets the FI’s objectives. As set out in eligibility guidance, the use of financial instruments for land, buildings or infrastructure of any nature for use and/or occupation by third party retail businesses (including hospitality and leisure) is not permitted.

Question 20 - (added 25/06/2020)

March 2022 Update - Closed

“Decisions regarding utilising unallocated ERDF funding were taken in conjunction with the Growth Programme Board. Details of the Board’s minutes can be found here.”

Will MHCLG be taking forward and launching calls for the ERDF Reserve Fund?

We are reviewing plans for utilising remaining unallocated ERDF funding, including our plans for an ERDF Reserve Fund and England-wide calls. We are developing investment options take into consideration the following areas:

• Available resource, taking account of new COVID-19 commitments such as the Reopening High Streets Safely Fund, and pipeline attrition (which will release money to a variable timescale);
• Ongoing need to manage foreign exchange fluctuations which can have a significant impact as the programme approaches full commitment;
• Addressing emerging recovery funding requirements, such as additional business support, sectoral or thematic needs;
• Alignment with other government initiatives and local recovery plans to support the economy; and
• Capacity to administer and operate calls for proposals (both within MHCLG and potential applicants), as well as timing of approvals.

The current circumstances have meant that the focus of ERDF and the mechanisms for getting funding out quickly to places have necessarily changed. As a result, we no longer expect to launch England-wide ERDF Reserve Fund calls for proposals and will instead be using more targeted and rapid ways of funding remaining activities, such as through a commissioning model.