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Chapter 7

A role for sub-regional organisations in Structural Funds : rising to the challenge

7.1 Advantages of involving sub-regional organisations in programme management and delivery

The SRN project has explored the involvement of sub-regional organisations in the management and delivery of EU Structural Funds and other regeneration programmes.

The SRN partners have :

• confirmed the importance for sub-regional bodies of effective partnership working with regional organisations (especially on Programme Monitoring Committees), local stakeholders, citizens and enterprises;
• demonstrated the capacity of sub-regional bodies for financial management, negotiation and representation of the needs and strengths of their local areas and communities, and have shared their experiences on the mechanisms they use for doing this;
• demonstrated their skills and arrangements for supporting the development of high quality EU funded-projects, and clusters of projects, which help to deliver Lisbon and Gothenburg goals from the bottom up;
• shown that they are capable of carrying out such projects within their own organisations, as beneficiaries;
• highlighted the need for strategic approaches to the use of EU and other funds to deliver sub-regional and EU policy goals and the contribution that sub-regional organisations can make to formulating and implementing these approaches; and
• shown that EU-funded territorial cooperation ‘adds value’.

Above all, the project has shown that sub-regional organisations make capable ‘intermediate bodies’ between national or regional programme managers and local project developers.

Structural Funds programming and the associated regulatory framework are widely regarded as having generated too much bureaucracy and ‘red tape’. Local stakeholders have typically found it difficult to participate. Intermediate bodies have been able to help with technical assistance and support to overcome the barriers to access, and have been an interface between the strategic national and regional programming levels and the local organisations that generate specific project or investment proposals, reflecting local needs.

Competences and organisational arrangements for sub-regional organisations operating as intermediate bodies vary from country to country depending on national legal and governance frameworks. Established local or provincial governmental bodies can carry out this function, as demonstrated in Barcelona, Bristol, Hranice, Lille and Modena. Where there is no existing elected body covering the area eligible for a funding programme, the experience of places like Tampere, Turku and Tenerife demonstrates that it is possible to use an EU programme to set up an effective and accountable special organisation to carry out these tasks.

Local development agencies, typically skilled and experienced in working with local enterprises and other stakeholders and in project development and implementation, work closely with regional and local authorities (or other sub-regional ‘intermediate bodies’) in their localities to make sure that EU funds are used to maximum effect.

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7.2 Opportunities and issues in Structural Funds programming 2007-2013

The framework of EU Regulations and Guidelines for Structural Funds for 2007-2013 recognises the contribution that sub-regional organisations can make to programme management and delivery.

Recent thinking at EU level on devolved budgetary arrangements, in particular, is a good fit with the findings of SRN. It is generally recognised that, whilst programme management might be more appropriate at NUTS 2 level, implementation and integrated project delivery are often better handled sub-regionally, especially where area-based regeneration is concerned. Localised delivery of programmes contributes to improved responsiveness to local needs, the achievement of high quality projects delivered on time and to cost, commitment to innovation and sustainability in project development, and making the EU more visible to citizens.

In establishing their National Strategic Reference Frameworks for the coordination of Structural Funds, national governments have had the flexibility to allow for management and delivery arrangements that fit different regional and sub-regional circumstances, competences and capacities. For example, for each Structural Fund or Objective, it has been open to national governments to identify the most appropriate level of regional or sub-regional decentralisation, taking into account such factors as territorial identity and relationships between different levels of governance.

In the case of Finland, for example, the appropriate sub-regional level for Structural Funds delivery is now considered to be the major urban area or city-region. Finland has organised Structural Funds delivery according to the subsidiarity principle since joining the EU, so most funding has been allocated to projects at sub-regional level ¹. However the role of cities and municipalities in comparison with that of other sub-regional bodies has probably not been as great as it could have been. Contributing to this situation in the 2000-2007 period was the fact that large cities like Helsinki, Tampere and Turku were so called ‘white areas’, not generally eligible for Objective 1 or 2, with only small areas of deprivation like Hervanta and East Turku able to draw on these funds. Such ‘white areas’ no longer exist, and city-regions have gained a more active role.

However, not all Member States have provided for sub-regional involvement in programming, let alone for devolved arrangements for implementation.

Some SRN partners have been able to influence aspects of the programmes for 2007-2013 in their regions. However, in most countries, sub-regional organisations have not had much opportunity to contribute directly to the preparation of the Operational Programmes, even where regional and sub-regional bodies have a track record of close cooperation.

Sub-regional and local actors with specific experience in managing Objective 2, URBAN II or ESF budgets, surely relevant in determining the new delivery arrangements, did not find it easy to inject this experience into the programming process. In some countries there is actually widespread lack of awareness that devolved delivery already happens.

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With regard to the Convergence and Regional Competitiveness and Employment Programmes, the role of sub-regional bodies is linked to whether or not the region has opted for spatial targeting of the available resources, and if so what territorial unit is being targeted. It also reflects decisions on how to address urban priorities in the new programmes now that the URBAN Community Initiative has been mainstreamed.

In England, for example, central government has recently placed a great deal of emphasis on city-regions. However, Regional Development Agencies (RDAs), which cover much larger territorial areas, have been give an expanded role in the management and delivery of EU programmes and domestic regeneration budgets, and it is still uncertain how these two different territorial levels will interrelate. The situation is complicated by the fact that there are no directly elected councils at regional or city-regional level. Thus there is still a role for elected local authorities in representing the interests of their local areas and communities.

Although they are provided for in the regulations, few national and regional governments have seen a need for intermediate bodies at sub-regional level for the 2007-2013 period.

The regulatory framework, programming requirements and procedures have been streamlined, so in theory at least it may be more straightforward than it was before for local stakeholders to access the programmes. However, the reduction of EU funds has led many regions to decide not to devolve management to sub-regions on grounds of efficiency. They argue that sub-delegation of parts of Operational Programmes to sub-regions is administratively complex and likely to absorb scarce resources. Additionally, with reduced funds in most EU regions and a requirement to focus on strategic priorities, Programme Monitoring Committees may be more inclined than previously to commission a cluster of projects on particular themes rather than holding open calls targeted towards local community groups. Even without sub-delegation of budgets there is a need for the intermediate body function, and here there is scope to draw on experience from places like Modena and Turku in establishing appropriate ways of working with local stakeholders to identify and implement packages of complementary actions.

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It will remain essential for elected local authorities, and sub-regional bodies with special expertise in working with all sectors, to have a role in identifying which EU-funded projects are most appropriate for their local areas, communities and economic and social circumstances. The case for a sub-regional strategy to guide funding remains stronger than ever.

Some regions already have strategies for competitiveness and innovation. Not many places have joined up strategies for both competitiveness and sustainability. These could be further developed at the sub-regional level and used to coordinate the application of EU and domestic budgets to the implementation of agreed policy goals.

  -  on putting funding packages together & accessing different EU budget lines

Opportunities, in the 2000-06 funding period, to develop certain complementary projects using different EU budgets may be reduced in future owing to changes in the specification of the programmes. In most EU regions it is going to be more difficult to develop complementary ERDF and ESF-funded projects in 2007-2013 because the ERDF and ESF programmes will not necessarily be delivered at the same spatial level. For example, in England there will be one national ESF programme managed by a national skills agency but 9 separate ERDF Regional Competitiveness and Employment programmes for which the lead organisations will be the Regional Development Agencies.

However, considerable efforts have been made in the design of the Operational Programmes and mechanisms for implementing them to simplify the arrangements for match-funding using domestic budgets.

Here the experience of sub-regional organisations in accessing and managing different funds will be highly relevant.

  -  on helping to design, pilot and implement innovative financial mechanisms

Better integration between budgets may be achieved not only through the development and implementation of sub-regional strategies but also through the use of innovative financial mechanisms, such as tripartite agreements.

Moreover, through territorial cooperation projects like SRN, sub-regional bodies may be able to import innovatory ideas about mechanisms for funding and financial management which work well in other places.

  -  on the best ways of working with Territorial Cooperation funds

Regional and sub-regional strategies for the use of Structural Funds and other EU budgets need to take account of the resources available through the Territorial Cooperation objective. The 2007-2013 programming period should provide opportunities for further integration of territorial cooperation and mainstream funds, in line with the Regions for Economic Change initiative.

The opportunity to ‘mainstream’ interregional cooperation in the programmes for Convergence and Competitiveness and Employment is of special interest for SRN partners. Sub-regional organisations have considerable experience in cooperation and ways need to be found to inject this expertise into the formulation and delivery of the Operational Programmes. Their experience of managing ERDF budgets in RFOs especially needs to be evaluated and publicised.

Local authorities, other sub-regional organisations and agencies must rise to the challenges presented for the current funding period.

They need to build their capacity for effective engagement with Structural Funds, whatever their new role turns out to be.

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7.3 Building capacity : recommendations for key players in Structural Funds programming, management and project work

Chapters 3 to 6 of this Guide have presented examples of good practice drawn from SRN partners’ own experience. On the basis of review and discussion of these ways of working during the project, we have the following recommendations to make.

The relevance and added value of engaging sub-regional organisations in the management and delivery of Structural Funds derive substantially from their capacity to build partnership with local stakeholders and to support the development and implementation of high quality projects in line with local and European policy goals.

National and regional governments should recognise that :

• Horizontal working is most likely to be effective where there is also good vertical partnership.
• Intermediary organisations taking a leading role in horizontal partnership need to be recognised as legitimate by the region above and municipalities below.
• Effective horizontal and vertical working needs commitment (political will).

Sub-regional organisations should recognise that, for successful partnership :

• There are distinctions between stakeholders and ‘partners’ in the world of public funding, and requirements in different funding programmes for collaborative working with different types of participant. They need to be aware of these different roles and requirements.
• Cooperation structures for stakeholder partnerships need to reflect local circumstances.
• It is important to consider when (at what point in a programme or project) and by what method to involve stakeholders. Early involvement is generally recommended.
• Developing a strategy for communication with stakeholders and citizens is useful to organise and improve cooperation. Specialist staff may be needed to focus on communication and information-giving.
• Special support, such as mentoring or training, may be needed to improve the participation of particular groups such as young people.
• Ways need to be found to avoid raising unrealistic expectations locally.

Keys to securing good quality EU-funded projects at local community level include :

• Tailoring support for project development to local circumstances.
• Good communication with the community and interest groups – the potential project developers - on the opportunities for project work and what they should consider when preparing a proposal.
• Setting up a support resource for community organisations so as to broaden participation.
• Establishing a technical assistance budget to support project development.
• Good contacts with funding organisations and development organisations in order to enlist their support.
• Using measures to ensure that projects are in line with both EU requirements and local action plans. Where the sub-regional organisation also has a role in selecting and monitoring projects they may design or make use of assessment tools which check for correspondence with Lisbon and Gothenburg priorities.
• Knowing when to use expert services to support high quality implementation of projects, especially in communication, financial matters, follow-up and benchmarking. Environmental specialists may be called in to give advice to project developers on how to improve the environmental quality of their proposed and on-going activities.
• Participation of staff from the sub-regional organisation in project steering groups.
• The evaluation of measurable results from projects against local and regional strategies.
• Following up the results of projects and regular reporting to decision-makers.
• Ensuring that good approaches developed through EU-funded projects are incorporated into the main activities of the local authority (or other sub-regional body).

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Local authorities and other sub-regional organisations have a wealth of experience in managing their own financial resources and in securing finance for regeneration and other projects from various domestic and EU funding programmes. They can already demonstrate that this activity is in line with local and European policy objectives. Increasingly, they are developing local or sub-regional strategies to ensure that all available resources are targeted and used in a complementary way. Longstanding use of programmes like INTERREG is especially worth noting.

National and regional governments should :

• Be more aware of the scope of the EU Territorial Cooperation objective as a resource for both capacity building and financing for local investments and activities.

Sub-regional organisations should :

• Recognise that EU funds can often support activities complementary to their day to day work.
• Maintain an overview of available funds.
• Ensure that they have in-house capacity to :
• understand the eligibility requirements for different budgets (for example, local authorities and regional development agencies may not be able to access the same programmes) and the different rules and regulations associated with each one;
• organise match funding for particular projects when programmes have different deadlines; and
• evaluate the outcomes of different programmes (such as impacts on the territory).
• Establish mechanisms to ensure that European project work is well-integrated into the main activities of the organisation. Specialist European officers should make an effort to involve appropriate technical officials in EU-funded projects, ensuring that projects are grounded in the main functions of the organisation. ‘Ownership’ of the project by the right staff will help to improve professional standards and delivery in these technical areas.

When undertaking projects :

• invest in comprehensive project planning, especially specifying precise objectives;
• consider team-building activities at the start of the project; and
• provide for the effective dissemination of the project results.
• To address the strengths and weaknesses of the local area and promote integration of policies at territorial level, set up a framework for sub-regional specification and management of a cluster of projects.
• Develop an integrated sub-regional strategy to make the best use of all available regeneration budgets.
• Involve appropriate external stakeholders in the strategy formulation process in order to establish a common vision and key strategic goals before looking at the funding possibilities.
• When designing the sub-regional strategy, consider using different funds ‘in sequence’, for example to support first research, then demonstration, then general implementation of a policy solution.
• Use the strategy as a framework for the application of a range of policy tools relevant for effective programme management and delivery.
• Use the strategy to influence what is available in future EU programmes.

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Development of a more strategic approach to the delivery of Structural Funds and other programmes at sub-regional level is most likely to succeed where there is a strong partnership between sub-regional bodies and their region.

National and regional governments should :

• Recognise that, for effective programming and management of EU Structural Funds, good cooperation between the region as the Managing Authority and sub-regional bodies is becoming ever more important.
• Recognise that partnership is best treated as a process rather than a result.
• Identify relevant partners and involve them in management and delivery from the start of funding programmes, in line with EU regulations and guidelines. Even if powers and responsibilities are not devolved, the right kind of partnership will enable the local level to contribute good ideas.
• Ensure that local authorities and other sub-regional organisations have adequate opportunities to shape the programmes and that their views are taken into account. They need to be involved throughout the life of the programme, starting with the programming phase.
• Take account of sub-regional strategies in preparing and implementing Operational Programmes.
• Recognise that the different types of sub-regional organisation may require different treatment.
• Establish a clear and appropriate split of responsibilities between regional and sub-regional levels and a suitable mechanism for partnership. A formal agreement between regional and sub-regional levels (such as a covenant or Service Level Agreement) is recommended and informal networking.
• Ensure good communication between regional and sub-regional levels.
• Recognise the value of informal networking. Foster personal contacts between the regional level and sub-regional staff responsible for Structural Funds.
• Ensure transparency and democratic accountability in programming.
• Be prepared to rely on sub-regional organisations (province or local authority) as the coordinating body for local actions.
• Ensure that sub-regional organisations give their opinions on project proposals from their localities. They will have an understanding of whether a particular proposal is appropriate, and, if a Local Action Plan or sub-regional strategy is in place, can verify whether or not a proposal is in line with this.

Sub-regional organisations should :

• Demonstrate the capacity to manage finances and ensure that good projects come forward so that the region can have confidence that they are up to the job.
• Where they are directly involved in project selection, establish mechanisms to ensure :
• that projects applying for EU funds are assessed not only against local objectives but also against the programme goals, and checked for consistency with Lisbon and sustainable development priorities;
• compliance with EU Regulations (such as State Aids rules); and
• democratic accountability.

Both regional and sub-regional organisations should :

• Ensure that adequate human and financial resources are available, and political support in place, to ensure effective cooperation.
• Make a clear distinction between political and technical roles, with proper decision-making processes for both political and technical levels and good working relationships between politicians and officials.
• Ensure that there is democratic accountability within the partnership arrangements

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Sharing experiences and developing new ways of working through collaboration with sub-regional organisations in other EU countries is a valuable way to build capacity and further develop the role of local authorities and their partners in the management and delivery of funding programmes.

National, regional and local governments should :

• Be aware that politicians at all levels of government are key actors who sometimes need to be persuaded that Territorial Cooperation is essential to the ‘European project’ and worth supporting.
• Recognise that Territorial Cooperation will not happen on a large-scale without clear economic incentives linked to political priorities.

National and regional governments and mainstream programme managers should:

• In designing and implementing mainstream Operational Programmes, recognise and make use of the experience of sub-regional organisations with interregional, transnational and cross-border cooperation
• Secure the necessary provision for interregional working in Operational Programmes for Convergence and Competitiveness (for example, commitment to participate in the Regions for Economic Change initiative) so that lessons learned through collaboration can be mainstreamed and new partnerships developed.
• Recognise that sub-regional organisations are key players in the delivery of territorial cooperation. They should be fully engaged in the development, review and management of the programmes.

Territorial Cooperation Programme Managing Authorities should:

• Recognise that the effectiveness of the Managing Authority is a key factor in determining success in projects. Consistency is needed in the performance of Managing Authorities and in national requirements for monitoring, auditing and reporting.
• In particular ensure clarity on the auditing, reporting and dissemination requirements placed on projects.
• With the JTS, undertake more rigorous monitoring and assessment of outcomes.

Sub-regional organisations should :

• Use the EU system well. Participation in cooperation projects can be a practical way to increase capacity to use EU and domestic regeneration programme funds while at the same time adding value to day to day functions.
• When developing EU-funded projects, have a clear view of aims and requirements at the outset.
• When acting as a potential lead partner, develop a ‘marketing strategy’ for the new project idea in order to interest potential partners.
• Recognise that economic incentive and creative people are necessary for success in undertaking cooperation projects.
• When working with partners from new EU Member States, make sure that all partners have an equal incentive for participation and equitable access to funding. The use of local experts is recommended, rather than excessive reliance on foreign consultants.
• When participating in cooperation projects, establish effective project management structures within the sub-regional organisation. These should preferably include a single point of contact for external partners, and staff with appropriate technical and financial expertise.
• Where projects are led by technical departments rather than specialist ‘European officers’, find ways to pool external contacts and financial expertise so as to avoid duplication of tasks and enable efficient compliance with financial reporting and auditing.
• Even where good institutional support can be provided to project developers ‘in-house’, maintain good relationships with the JTS of relevant funding programmes and with local, regional and national contact officials.
• If partners want to keep working together, start developing new ideas for projects before the current project ends. They should then aim to submit proposals to early funding calls, when the opportunities are greatest and the competition least.
• Make the most of the cooperation opportunities that are available and enjoy the experience of working in an international team.

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