Guidance

Annual Implementation Report 2020

Published 26 October 2021

Applies to England

Annual Implementation Report Identification

CCI	2014UK05M9OP001
Title	ESF England
Version	2020.0
Date of approval of the report by the monitoring committee	04-May-2021

Overview of the implementation of the Operational Programme (Article 50(2) and 111(3)(A) of regulation (EU) NO 1303/2013)

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 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 2021 EUR exchange rate of 0.90307.

On 23 March the UK entered the first of three national COVID-19 lockdowns. All employees able to work effectively at home were advised to do so, with travel restricted to essential journeys only; this continues to be the UK Government advice. For those unable to work, the Government introduced a furlough scheme to support businesses by paying a grant to cover 80% of wages. These restrictions have had an adverse effect on European Social Fund (ESF) due to the fact that by adhering to this advice, Grant Recipient (GR) staff have also had restrictions on meeting or offering face to face support to participants. These rules apply to Managing Authority (MA) staff (who are also working from home) and therefore work normally carried out during visits to GRs is being undertaken virtually using a range of easements.

Since 23 March, there has been a noticeable drop in the activity undertaken under Priority Axis (PA) 2, this is due to business closures and business employees being furloughed.

Two Operational Programme (OP) amendments were made during 2020. Firstly, a new PA 4 was introduced to specifically fund support in response to the impact of COVID-19. PA 4 seeks to address issues associated with digital exclusion by providing access to information and services through digital technologies. Participants are provided with a device to allow internet access with support to enable the set up and use of the equipment, along with a data allowance. The initial activity delivered under Priority Access (PA) 4 took advantage of the 100% co-financing easement provided by the European Commission (EC) as part of its response to the COVID-19 pandemic. The PA 4 Lump Sum Digital Interventions Call was launched in September 2020 – a total of 50 applications were received, of which 30 were approved, 8 projects subsequently withdrew due to concerns about deliverability during lockdown and a further 2 closed prior to submitting a claim. The remaining 20 projects successfully delivered support to over 1,700 participants, utilising £1,050,439.53 of ESF funding. To support organisations in administrating these short term projects, all projects were funded under the Lump Sum Simplified Cost Option (SCO).

Secondly, the MA also made an OP amendment to reflect changes in the current demand by moving funding from the More Developed (MD) Category of Region (CoR) to the Transition (T) CoR and between PAs in the MD CoR to increase the capacity of the Reserve Fund to respond to post COVID-19 support needs. A further amendment to the OP is anticipated in late 2021 to consolidate participant outcomes.

During 2020 Interim Payment Applications (IPAs) and Final Payment Application (FPA) totalling €581,502,019.87 were submitted and reimbursed, as follows:

• IPA14 submitted 1 April 2020 for €79,001,286.68 total eligible expenditure. Reimbursed 21 April 2020

• FPA15 submitted 31 July 2020 for €176,347,192.05 total eligible expenditure. Reimbursed 16 September 2020

• IPA16 submitted 28 October 2020 for €95,516,757.37 total eligible expenditure. Reimbursed 11 November 2020

• IPA17 submitted 17 December 2020 for €230,636,783.77 total eligible expenditure. Reimbursed 1 February 2021

At the end of 2020, committed spend for the 2014 to 2020 Programme was £2,592,415,897.86.

The data below illustrates the achievements by each CoR, for both the Participant and Financial indicators, against the 2023 final Programme target:

1.1 Participant Performance

Priority Axis 1 O1

• Less Developed (LD) 10,877 (46%) Actual Outputs against 2023 target of 23,900

• T 199,459 (74%) Actual Outputs against 2023 target of 268,050

• MD 595,162 (68%) Actual Outputs against 2023 target of 874,430

• YEI 85,828 (78%) Actual Outputs against 2023 target of 110,490

Priority Axis 1 O2

• LD 3,495 (64%) Actual Outputs against 2023 target of 5,460

• T 18,396 (34%) Actual Outputs against 2023 target of 54,120

• MD 82,445 (31%) Actual Outputs against 2023 target of 270,130

Priority Axis 2

• LD 9,427 (64%) Actual Outputs against 2023 target of 14,840

• T 99,440 (51%) Actual Outputs against 2023 target of 196,480

• MD 235,073 (51%) Actual Outputs against 2023 target of 462,650

Priority Axis 4

• LD 81 CV31 participants

• T 399 CV31 participants

• MD 1,222 CV31 participants

1.2 Financial Performance

Priority Axis 1

• LD Actuals declared to the European Commission (EC) by 31/12/2020 of €36.7m (32%) against a 2023 target of €116.3m

• T Actuals declared to the EC by 31/12/2020 of €351m (57%) against a 2023 target of €611.4m

• MD Actuals declared to the EC by 31/12/2020 of €1.2bn (47%) against a 2023 target of €2.56bn

• YEI Actuals declared to the EC by 31/12/2020 of €210.5m (46%) against a 2023 target of €461.8m

Priority Axis 2

• LD Actuals declared to the EC by 31/12/2020 of €18.2m (30%) against a 2023 target of €61.3m

• T Actuals declared to the EC by 31/12/2020 of €131.5m (28%) against a 2023 target of €477m

• MD Actuals declared to the EC by 31/12/2020 of €308.7m (20%) against a 2023 target of €1.54bn

A large proportion of ESF England’s provision is delivered through four national Co-Financing Organisations (CFOs). As these organisations deliver such a significant portion of the ESF England Programme, the MA has ensured that these partners are closely performance managed. In 2020 all four CFOs worked with the MA to consider extending projects based on published performance criteria, focusing primarily on Strategic Fit and Value for Money. Projects meeting the criteria were offered extensions and those that did not are closing down. The exercise will be completed early 2021. In addition, those CFO projects that were sub contracted on a payment by result model were amended to be actual cost models, thus recognising the impact of the pandemic on the ability of projects to get people into jobs.

Communications form an essential part of ESF delivery, especially so during lockdown. ESF received positive feedback from the ESIF Programme Partner 2020 Communications survey evaluation. Such as, circa 80% of respondents accessing the 2020 ESF booklet found it ‘informative, relevant, useful and helpful’.

Since April 2020, the ESF COVID-19 Response Q and A (published alongside ERDF) on GOV.UK has been accessed over 10,800 and feedback has been 90% positive.

2. Implementation of the Priority Axis (Article 50(2) of Regulation (EU) No 1303/2013)

ID

1

Priority Axis

Inclusive Labour Markets

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

The MA and its delivery organisations have experienced significant disruption to its implementation of the Programme during 2020 as a result of COVID-19. There have been 3 national lockdowns in England, as referenced in Section 2.1. However, through its approach to implementation and continually improving engagement with its delivery partners, commitment of remaining funds has continued at pace after a short ‘pause’ in the publishing of Calls while assessing the economic impact of the pandemic.

The lockdown and ‘work from home’ message impacted the MA’s ability to process claims, but the introduction of easements and a determined focus on the 2020 N+3 target ensured this indicator was exceeded by 1%.

The commitment levels achieved at the end of 2020 are broken down by PA, below. The approach outlined in the last report has been largely continued and listed below are some further examples of additional steps taken.

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

• introduction of PA 4, via OP amendment, to address some of the issues resulting from COVID-19; specifically, digital poverty via a new IP4.1

• significantly improved stakeholder engagement and joint working – for example, the creation of a Task and Finish group with our major partners in December 2020, has done excellent work in refining our approach to finalising the commitment of remaining Programme funds in 2021

As a result commitment by the end of 2020 in PA1 was £1,818,968,733.51

ID

2

Priority Axis

Skills for Growth

Many of the actions taken and focus stated above were also appropriate for PA 2. However, it should be noted that as a result of continued lockdowns, and restrictions on business, the impact of COVID-19 on PA 2 has been more significant. Engagement with Small and Medium Employers (SMEs) in IP2.2 as been significantly impacted as many SMEs are focussing on survival, and 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, as many SMEs simply do not have the capacity to engage, or to take time out to plan for the longer term. IP2.1 has also suffered a slow down as a result of employees being furloughed, and therefore being unable to engage in longer term skills activity.

However, this has been off set by greater demand in PA 1, with increased numbers of unemployed. The ESF Programme will therefore seek to transfer funds from PA 2 to PA 1 during 2021 in order to meet the increased demand.

As a result, commitment by the end of 2020 in PA 2 was £744,082,892.97

ID

3

Priority Axis

Technical Assistance

The MA took the opportunity to move Technical Assistance (TA) claims to the Simplified Cost Option (SCO) model following the change to the Regulation. All projects now operate on this basis, and the claims from the MA to the EC are based on a simple calculation of 4% of the expenditure in PA 1 and PA 2 (and in future years PA 4).

Following the provision of the draft Guidance on the TASCO, the MA reviewed all claims that were used to calculate the 4% TA draw down. From the draft guidance it is clear that our previous interpretation did not align with the Commission’s view of when claims could be included in the 4%.

We have therefore determined a definition of when a management verification is deemed complete and the CA have removed any expenditure (using this deemed date) relating to the TASCO calculation using A137 (2), until additional management verifications have taken place. These claims will be reviewed and re-introduced in subsequent accounts subject to any additional action that may be required.

However, there remains some concern regarding the applicability of individual project irregularities attracting an additional 4% correction, at project, rather than Programme level. This is discussed further in the Annual Assurance Package.

As a result, commitment by the end of 2020 in PA 3 was £28,138,829.85

ID

4

Priority Axis

COVID-19 Response

In recognition that projects’ ability to access Match Funding may be impacted by COVID-19, the EC confirmed that programmes could operate projects on a 100% intervention rate under strict criteria.

As stated at section 2.1, the MA consulted with partners to identify options to implement easements and maximise the potential in funding activities to alleviate the impacts of the pandemic.

The introduction of PA4 seeks to address two main access issues associated with digital exclusion: physical access to the internet via a device and data. These help participants suffering digital poverty gain access to online services and information, improving their capacity to engage in the digital society and helping them to stay engaged throughout lockdown restrictions due to COVID-19.

The MA and Greater London Authority (GLA) each launched calls for £5m ESF offering a 100% intervention rate and the funding and associated deliverables were apportioned across the 3 CoRs.

The Calls sought to deliver activity supporting existing ESF participants as a “bolt on” to the ESF support they were currently receiving through mainstream ESF projects.

All activity had to be completed by 31 December 2020.

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 Call, the MA and GLA are planning on launching a further Call each to provide similar support to ESF participants in 2021.

Commitment by the end of 2020 in PA 4 was £1,050,439.53

2.1 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 (NEET), including young people at risk of social exclusion and young people from marginalised communities, including through the implementation of the Youth Guarantee.

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

Priority Axis: 1

Inclusive Labour Markets

Investment Priority 1

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:1

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 1

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 , 2C can be found within data tables 4 -9i

2.2 Priority Axes for technical assistance

Priority Axis: 3

Technical Assistance

Specific objective

3.1 To ensure that the activities which fall within the scope of the programme are managed, monitored and evaluated in line with the Common Provisions Regulation, European Social Fund Regulation and the Commission’s delegated and implementing regulations.

Tables 2C 4A and 4B can be found within data tables PA3

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 ESF 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)

Table 11

Allocation of YEI resources to young people outside the eligible.

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.

Evaluation evidence gathered in 2020 builds on previous findings which show that the ESF Programme is being effective in meeting its core aims of promoting sustainable employment and labour market mobility, improving social inclusion and enabling access to education and training. The new evidence, which is based on analysis of qualitative data provides a strong indicator of the positive impact ESF is having on participants.

Qualitative Case Study Report

As part of the ongoing impact evaluation of the ESF, DWP commissioned a qualitative case study report to develop a detailed understanding of how and why the observed outcomes presented in the AIR 2019 report were achieved. In total, 20 case studies were included as part of the research across each of the Investment Priorities (IPs) as well as a separate case study of provision delivered through Her Majesty’s Prison and Probation Service (HMPPS) which is done separately due to differences in the way it is funded and managed compared to other ESF provision. The fieldwork was carried out between September 2019 and February 2020 and was therefore unaffected by the COVID-19 pandemic.

Case study recruitment targets were designed to cover a selection of IPs and funding routes (including the 4 Co-Financing Organisations and direct bids). These targets were agreed upon between the contractor, IFF Research, and the ESF evaluation team based in DWP. For HMPPS, sites were selected based on a specification provided by IFF and in co-operation with HMPPS to ensure access to the sites. The specification included a regional spread, a mix of probation and custody facilities and one women’s prison.

Case studies were typically carried out over two days. Data collection included interviews with delivery staff, participants and where relevant, delivery partners and employers. For HMPPS, case studies were carried out over a one day period. Data collection included interviews with team leaders, case managers and participants.

Analysis revealed a complex but generally effective supply chain has been built over successive rounds of ESF funding. In general, positive working relationships had been developed within the supply chain of each project. Successfully developing these relationships was a highly influential factor in determining the success of a project. When relations broke down between the CFO, Local Enterprise Partnerships (LEP) and prime contractors, it resulted in a lack of knowledge of ESF processes being translated. Providers were keen to assert that provision was entirely dependent on ESF funding and will not be sustained without it.

In line with results from the ESF leavers survey 2016 to 2019 and the YEI Impact Evaluation (which were submitted to support previous AIR reports), findings show that ESF provision successfully engaged with its target audience, including vulnerable individuals far from the labour market. Also confirming earlier research, the person focused support offered by the key worker model was deemed crucial to achieving positive outcomes in projects across most IPs.

Analysis revealed that a participant’s journey back to work was rarely linear, and many had complex needs or unpredictable lives that required a lot of delivery staff time to support properly. As such, a flexible approach to project delivery was important in order to allow for staff to accommodate individual needs as far as possible. It is worth noting that ESF provision also reached those already in work, who otherwise would not have had access to development opportunities. For example, it allowed for businesses to provide training which they could not have been afforded otherwise.

Findings back up quantitative evidence of ESF’s strong performance in achieving outcomes; most projects taking part in this research were on track to meet targets if not already exceeding them. Payment by results models have kept delivery focussed on programme targets, however providers felt that some targets were often seen as being inappropriate given the complex individual situations of participants. It was evident that providers wanted a greater emphasis placed on the soft outcomes that client groups are more likely to achieve within the timeframe of ESF project delivery.

One of the biggest challenges facing smaller organisations was the administrative duties that came with the ESF as the eligibility checks and registration processes were considered far too complex. Evidencing of outcomes was also very time consuming for smaller project deliverers, often at times impossible.

In meeting these requirements, the level of support available to smaller organisations from either the CFO, prime providers or contract managers was important. In some cases, the research found examples of prime providers acting as a mentor to smaller organisations or providing upfront payments to help them to manage cash-flow risks.

Updates on ongoing research

Publication of the three outstanding reports was originally scheduled for 2020 but was delayed as a result of changing priorities within the department owing to COVID-19. These reports are now scheduled to be published in summer 2021, formally completing three agreed outputs from the ESF Evaluation Technical Assistance project.

The commissioning of the next leavers survey was also put on hold due to COVID-19. The commissioning process is due to start in May 2021 with the aim to start fieldwork in November 2021. Gaps in the survey sample will be filled as far as possible by the use of data from administrative registers.

Planned activity in 2021

Evaluation activity in 2021 will include:

• the publication of the three outstanding ESF evaluation reports:

  • ESF Leavers Survey 2016 to 19

  • YEI Impact Evaluation

  • ESF Qualitative Case Study Report

• commissioning of the new leavers survey to track leavers from 2021to 2023

Ongoing counterfactual impact evaluation. The first stage of this analysis will be completed by mid-2021 and be quality assured by external experts. Further impact analysis will continue for the remainder of the Programme.

4. Information on the implementation of the Youth Employment Initiative, where applicable

Youth Unemployment is rising due to the impact of COVID-19. The overall 16 to 24 youth unemployment rate for England was 12.9% between October 2019 to September 2020, having increased from 11.7% (October 2018 to September 2019). For 16 to 24 males it is up to 14.4% from 13.8%; for females it increased to 11.4% from 9.5%. (source: NOMIS)

Between March to December 2020, the number of young people aged 16 to 24 claiming unemployment related benefits more than doubled, increasing by 490,000 (March) to 991,000 by December 2020. For those not working, the figure had increased from 365,000 March to 620,000 in December 2020 (source: Stat-xplore).

At 31 December 2020, 785,000 jobs held by those aged 24 or under were furloughed due to COVID-19, representing 19% of eligible jobs. There are concerns regarding them resuming to paid jobs. (source: House of Commons Briefing paper https://commonslibrary.parliament.uk/research-briefings/sn05871)

Although most young people continue in education or training when they leave school, there is still a group, aged 18 to19, who drop out or struggle to transition to the labour market. The COVID-19 pandemic has limited the number of opportunities due to national lockdowns and the impact on businesses affected through the slowdown in the economy. The Institute for Fiscal Studies (IFS) recently commented on how, over the last decade, young people starting out in the labour market have increasingly worked in relatively low paid occupations. Many of these are in sectors hardest hit by the Pandemic, for example hospitality and non-food retail. Contractions in shut down sectors will make it harder for young people to step onto the career ladder; reduced job opportunities will reduce potential to move into higher paying occupations. (source: IFS Briefing Note July 2020 https://www.ifs.org.uk/publications/14914)

NEET

Office for National Statistics analysis indicates the proportion of 16 to 24 year old NEETs has been in a general decline since September 2011, with figures being relatively flat since 2017.

However, in July to September 2020, an estimated 232,000 unemployed men aged 16 to 24 years were NEET, up by a record 53,000 on the quarter, and 112,000 unemployed women aged 16 to 24 years were NEET, down by 7,000 on the quarter, indicating COVID has had a greater impact on NEET men.

In England, there have been a number of challenges regarding YEI implementation. 2020 was particularly challenging due to COVID-19, affecting project delivery and impacting on young people leaving education with no prospect of moving into employment or further or higher education due to national lockdowns and the economic impact of the Pandemic.

YEI eligible areas reported increases in youth unemployment as a result of the Pandemic, particularly in the 16 to 19 age group. While the impacts maybe masked to some extent by the UK government’s furlough scheme or young people remaining in education, evidence indicates young people are less likely to be furloughed. The Pandemic highlighted an increasing need for support for unemployed and disadvantaged NEET young people to enable them to be better equipped and more competitive in the labour market. DWP analysis of the impacts of the Pandemic across England indicates that Transition (T) areas are particularly affected by COVID-19 regulations. This partly drove the need for the OP amendment submitted in December 2020, to move funding from More Developed (MD) CoR to T, utilising the flexibilities offered by the CRII and CRII+ Regulations.

Source: https://www.ons.gov.uk/employmentandlabourmarket/peoplenotinwork/unemployment/bulletins/youngpeoplenotineducationemploymentortrainingneet/november2020

The MA has implemented a number of easements to help projects continue to make claims throughout 2020. In response to the support needs identified in the T YEI eligible areas, the MA has moved €19m from MD CoR YEI allocation to the T YEI allocation. This will enable YEI eligible T areas to deliver much needed provision to NEETs to address gaps in skills and other barriers to employment. Moving these funds from the YEI MD CoR retains sufficient funds to continue to service funding requests from YEI eligible areas within that CoR.

The MA recognises that due to the current Pandemic, school leavers, aged 15 to18, ended their final term in April 2020 and did not have their end of year exams. Given the current labour market and education opportunities, without our intervention there was a risk they would become NEET in the following 3 to 6 months. YEI projects were well placed to provide this support, and played a vital role in ensuring young people at risk of suffering long term negative career impacts could get access to the tools and opportunities they need, thus ensuring that they are better prepared for any labour market or education opportunities during the recovery period.

YEI rules state 90% of the funding must be spent in Nomenclature of Territorial Units for Statistics (NUTS) 2 areas with youth unemployment rates above 25% in 2012. The remaining 10% is targeted at four NUTS 3 areas with youth unemployment rates above 30% in 2012.

The MA has received requests from the NUTS 3 YEI eligible areas for more funding to respond to the increasing number of young people becoming NEET as a result of the Pandemic. Their interventions would develop the skillset of these young people to enable them to be better equipped and more competitive in the labour market as the country recovers from the Pandemic. It is fair to say the true societal impact of COVID-19 is still emerging, however, we expect it will have a disproportionate impact on certain regions.

In England, we have previously used the current level of flexibility to support areas with higher levels of youth unemployment (NUTS 3). Therefore, the MA believe it is critical to increase this flexibility to provide additional funding support to those regions with the most need, which ESF will be able to do if we can flex funds above the existing 10% threshold.

To address this the MA sought flexibility from the EC to move YEI and ESF match funds in excess of the 10% cap to the NUTS 3 areas, but this was refused.

As a consequence, potential YEI projects in those areas may not progress leaving a gap in provision for those young people who are NEET and in need of support, so there is a significant risk they will miss out or be left behind.

This is exacerbated by the revised forecast end date for the furlough scheme which is likely to result in further job losses particularly amongst young people. In the meantime, the MA are actively considering other funding solutions across the ESF Programme to ensure support is in place as set out in the paragraph below.

As a result of the Pandemic and the impact on young people in particular those who are NEET or about to become NEET, the MA is seeking to extend the funding and end dates of well performing existing projects (in the NUTS2 areas) in both the MD and T CoRs to ensure that there is provision available to support young people who are NEET.

YEI Performance

The information below highlights key aspects of YEI performance in terms of immediate results on leaving the operation. A total of 85,828 participants were supported in 2020.

Indicator	Total	Male (M)	Female (F)	Target	Actual to date	+/-% points
Results (M+F)
YEI CRO2	18,043	10,750	7,293	48%	29%*	-19
U/E receiving offer
YEI CR03	22,373	13,455	8,918	48%	36%*	-12
U/E positive result
YEI CR05	6,769	3,895	2,874	38%	27%**	-11
LTU receiving offer
YEI CR06	8,304	4,812	3,492	38%	33%**	-5
LTU positive result
YEI CR08	10,835	6,158	4,677	33%	44%***	+11
Inactive receiving offer

YEI CR09	11,091	6,316	4,775	33%	46%***	+13
Inactive positive result

*YEI 09: Total unemployed = 61,392

** YEI 010: Total LTU = 25,254 (sub-set of YEI 09)

***YEI 011: Total inactive = 24,436

YEI 09 + YEI 011 = 61,392 + 24,436 = 85,828 (Total Participants)

29% of unemployed YEI participants received an offer of employment, continued education, apprenticeship or traineeship upon leaving which is 19% points below the 2023 target. Performance data for the comparable targets for long term unemployed (YEI CR05) and inactive (YEI CR08) show that 27% and 44% of participants received offers (10% below and 11% points above their respective targets).

The detail above also shows that 36% of unemployed participants are achieving a positive outcome in terms of job offer, continued education, apprenticeship or traineeship upon leaving, -12% points below the YEI CR03 (2023) target. Long-term unemployed participants are only 5% points below the comparable YEI CR06 target and inactive participants are making excellent progress (currently 13% above the comparable YEI CR09 target for positive outcomes).

Taken together, the evidence suggests that the impact of COVID-19 on the UK economy will disproportionately affect young NEETs, setting them further back in the post lockdown labour market. More young NEETs will require long term intensive support to enable them to access opportunities that are available to other young people who are more job ready, such as the Kickstart Scheme introduced by DWP. While the UK Office for Budget Responsibility has forecast a lower and later peak in the unemployment rate than previous forecasts (source: OBR, March 2021), meeting YEI Results targets will be even more challenging for the remainder of the Programme. In light of this, the MA is considering OP amendments to the targets.

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.

The Programme continued to make progress during 2020 with a high volume of commitment through Funding Agreements (FAs) and payments made to Grant Recipients (GRs). Lessons learned from the previous year’s N+3 process led to close monitoring of claims submission and subsequent activity.

For 2020, the cumulative value of the N+3 target was €1,898m. Although there was sufficient expenditure within the ESF Programme to achieve the N+3 target in 2020, COVID-19 impacted on the ESF Managing Authority’s (MA) ability to obtain the level of evidence required for the full expenditure to be included in our IPA or FPA, so the level of expected Payment Applications has been lower than was forecast.

The MA launched a Reserve Fund (RF) on 20 September 2019 to ensure the most effective management of remaining funds until the end of the Programme. The RF has been kept under continuous review through assessment of committed spend, the pipeline of appraisal activity, proposed Calls and exchange rate movements.

During the early stages of the Pandemic the RF was temporarily paused to allow the MA to evaluate the impact of COVID and consider the additionality of ESF moving forward, given the changing landscape of the economy, business models, health, education and provision. As ESF beneficiaries are now working from home, and delivery is now online (at least for the moment), the ability of GRs to access the necessary supporting evidence for their claims is impaired.

Following the re-instatement of the RF activity, the focus was solely on COVID-19 economic recovery activities. From March 2020, a total of 19 Calls totalling £41,175,000 of ESF funds have been launched following proposals considered by the RF Panel and a further £33.9m of additional funding has been released to applications against previous calls to support increased activity linked to a LEP areas’ economic recovery plan.

The MA reviewed its guidance to support applicants and GRs and swiftly implemented easements to support the continued release of Funding Agreements, the completion of Project Inception Visits and issuing payments to GRs to ensure projects could continue to operate. A pragmatic approach has been taken with projects during the Pandemic. Those that can clearly evidence the impact of the Pandemic have, and will, be given time to recover performance where possible. Virtual Contract Management Visits have been implemented to review performance and provide support.

Due to the COVID-19 pandemic, OTSVs after March 2020 have had to be completed using a desk-based system. 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 Audit Authority have undertaken a similar approach to their A127 activity.

The MA has continued to improve a suite of contract management tools to drive the performance of financials and deliverables for Direct Bids and CFOs, which have provided Contract Managers with more useable data in order to challenge under-performance where appropriate.

Throughout 2020, 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, LEP areas took up the opportunity to extend CFO provision, whilst in others the MA chose to close underperforming projects so that funding could be recycled and utilised more effectively through new calls.

To encourage performance improvements, CFOs continue to support best practice sharing forums, which have aided in the development of recovery plans for those Projects struggling to meet performance requirements.

In the Less Developed Region (LDR), CFOs worked closely with providers to improve performance by: using SMART action plans; holding regular performance meetings; using Quarterly Reviews; and, published Performance Management Points.

The MA continued to work intensely with Cornwall and the Isles of Scilly (CIoS), ESF England’s only LDR, during 2020. It is an area expected to be hit hard by the challenges caused by the Pandemic and the remaining LD funds in the RF will be released to support economic recovery plans.

Areas across England report a lack of available Match Funding, which has been further compounded by the Pandemic, as it has been cited as a reason for a lack of applications against some published Calls. Of the 27 Calls published in 2020, (valued at £52,825,000), 8 of them (totalling £15,950,000), failed to attract any applications. Whilst the MA continuously looks to identify Match Funding sources, local areas have been asked to do further work in advance of RF proposals to ensure potential Match Funding is identified, thereby reducing the number of Calls that could result in market failure.

The OP amendment in Autumn 2020 enabled us to quickly respond to COVID-19 easements provided by the EC and aided development of a Digital Inclusion Call to help participants overcome digital poverty.

Through continued monitoring of Programme activity and close working with external stakeholders, the MA proposed moving money between CoRs. The COVID-19 pandemic has had a disproportionate impact on Transition (T) areas so, in response to that, £100m was moved from the MD CoR to the T CoR. The additional money is being used to directly fund employment, social inclusion and skills support needs caused by the Pandemic and help 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 CoR.

The Programme Governance structure has been maintained throughout 2020 with the majority of meetings taking place online and by using Written Procedure where appropriate. This activity has been further expanded by utilising experienced external stakeholders from the Performance and Disputes Resolution 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 RF allocation and ensure that it is used to target economic recovery during and following the COVID-19 pandemic.

2020 saw the advent of both a health, and subsequent economic crisis, which was quickly recognised by the EC, resulting in the CRII and CRII+ changes being introduced. In addition, ESFD sought to develop further easements to support GRs to reduce the impact of COVID-19.

The MA consulted with partners to identify options for implementing easements and maximise potential to fund support to alleviate the impact of the Pandemic.

Detailed discussions with all teams across the Managing Authority (MA), Certifying Authority (CA) and the Audit Authority (AA) were used to develop comprehensive processes to support the changes, these were also documented in the Management and Control Systems Description, and were shared with the European Commission in an ‘Easements Paper’.

In order to ensure that support to the most vulnerable could continue, and to address cash-flow concerns in projects, the MA agreed to revise current Direct Bid Claims processes to take the Desk-Based Evidence Check (DBEC) from being a pre-payment requirement to a post-payment requirement to speed up the claim payment time. In addition, Project Inception Visits (PIVs) and Article 125 On-the-Spot Visits (OTSVs) were changed to become desk-based, virtual visits, with evidence being requested electronically, rather than face-to-face visits on GR premises.

Both the MA and CA have provided assurance that the interim proposals meet internal and external requirements.

However, with regard to performance targets, the impact of the Pandemic cannot be understated. Many projects have seen a significant period of slow-down, due to employment opportunities being severely curtailed. In addition, the ability for projects to work with participants in group settings has been withdrawn, so many activities have had to be redesigned, focussing on one-to-one settings, as well as using virtual and 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.

As a result of COVID-19, the economic situation has significantly changed especially on growth and employment levels, with some sections of the economy suffering significant downsizing including, Tourism, Hospitality and Retail. It is envisaged that recovery from the Pandemic will take some time, so it is unlikely that we will be able to expect projects to ‘catch up’ on their performance in the near future.

The changed economic environment, and the operating model of projects has therefore severely impacted the Programme’s overall ability to meet the Output and Result performance targets. Although, as stated above, the MA have been flexible at individual project level, we will need that same flexibility to be applied at Programme level. As a result of this, it is envisaged that an Operational Programme amendment will be needed later this year 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.

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

7. Report on the implementation of financial instruments

8. Optional for the report for the to be submitted in 2016, not applicable to other light reports: Actions taken to fulfil ex-ante conditionalities

This information 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)

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.

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

10. Reporting submitted in years 2017, 2019 and final implementation report

(Article 50(4), 111(3) and (4) of regulation (EU) No 1303/2013

10.1 Assessment of the implementation of the Operational Programme (ARTICLES 50(4) AND 111(4) OF REGULATION (EU) NO 1303/2013)

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

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)

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

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%

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

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)

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

Actions taken to fulfil ex-ante conditionalities (article 50(4) of regulation (EU) no 1303/2013) (may be included in the report to be submitted in 2016 (see point 9 above) required in report submitted in 2017) option: progress report

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)

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.

Not applicable

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

Not applicable

Progress in the implementation of any interregional and transnational actions

Not applicable

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)

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

Not applicable

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.

Not applicable

12. Reporting submitted in year 2019 and final implementation report (Article 50(5) of Regulation (EU) No 1303/2013)

12.1 Financial information at Priority Axis and programme level (articles 21(2) and 22(7) of regulation (EU) no 1303/2013)

13. 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. Not applicable

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).

Not applicable

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.