ESIF Programme Monitoring Committee minutes: May 2022

Attendees and apologies

• Hilary Pearce (HP) - Scottish Government (Chair)
• Cathy Cacace (CC) - Scottish Government
• Susan Tamburrini (ST) - Scottish Government
• Ryan Gunn (RG) - Scottish Government
• Robert Buntin (RB) - Scottish Government
• Euan Barclay (EB) - Scottish Government
• Anthony Carrick (AC) - Scottish Government
• Kayleigh McLean (KMc) - Scottish Government
• Anna Fowlie (AF) - SCVO
• Jackie Thomson (JT) - Orkney Island Council
• Angus Murray (AM) - Comhairle Nan Eilean Siar
• John Mundell (JM) - Orkney Council
• Christine Mulligan (CM) - Skills Development Scotland (SDS)
• Malcolm Leitch (ML) - Scottish Local Authorities Economic Development (SLAED)
• Francesca Giannini (FG) - Scottish Enterprise (SE)
• Rob Clarke (RC) - Highlands and Islands Enterprise
• Gavin Bruce (GB) - Scottish Funding Council
• Stuart Allison (SA) - Orkney Island Council

Observers

• Jennifer Inglis-Jones - Audit Authority
• Guus Muijzers (GM) - European Commission
• Peter Matthjs (PM) - European Commission
• Joanne Knight (JKn) - European Commission
• Kris Magnus (KM) - European Commission DG Regio
• Susan Fleming (SF) - European Commission DG Emploi

Apologies

• Neil Ritch (NR) - National Lottery Community Fund
• Dave Roberts (DR) - Highland Council; Highlands and Islands Territorial Committee (HITC)
• Damien Yeates (DY) - SDS
• Patrick Douglas-Early (PDE) - Scottish Government
• Douglas Colquhoun (DC) - Scottish Enterprise

Items and actions

Agenda

• welcome and apologies
• conflict of interest
• minute of previous PMC meeting on 7 December including action log
• financial/operational performance update
• communication update
• evaluation strategy update
• European Social Fund (ESF) suspension spdate
• PMC working group
• any other business

Welcome

HP welcomed all to the meeting, noting that this is the first PMC of this year. HP thanked the commitment of the PMC working group, and expressed hope that the recent claims letter that went out on 13 May 2022 to all Lead Partners (LP) will have a positive effect on performance. HP noted the need to improve performance and meet N+3 targets for 2022 and 2023 to avoid or minimise future de-commitments.

HP stated that the process to prepare the 2021 Annual Implementation Reports (AIRs) has begun and there have been helpful discussions with desk officers. The outputs, performance and results table will need to be completed but have the Managing Authority (MA) has postponed presenting the drafts to members to allow Lead Partners additional time to input, update and improve the data currently on EUMIS. Therefore, the draft AIRs will be circulated by written procedure to members.

HP noted that there was an issue with the papers, firstly there was an additional paper to go along with the finance performance paper, so this was only sent out yesterday and this was a summary of the claims position. HP added that the risk register should have also been included on the agenda.

AC read out the list of apologies which are noted above.

Conflict of interest

HP asked for any conflicts of interest relating to any of the substantive agenda items.

No conflicts of interest were reported.

Minute of previous PMC meeting on 7 December including action log

FG questioned why, in relation to the action log, it appeared that very few actions have been completed.

HP responded that this is not the case, but the version of the minute had not recorded the actions accurately, and RG will go through these during the meeting.

KM noted that his interventions have been captured accurately and does not have any further comments. But, it does not seem that these actions were completed, for example the revised minutes have not been received. KM added that the action log may need to be revisited. One of the actions of a previous meeting was that minutes would be circulated sooner after the meeting.

RG stated the minutes have been amended and these will be re-circulated. RG responded to KM, that the only incomplete action point is the second one, which was for RG to check notes of previous meeting. On the third action, Lynda Smith is doing an updated, regarding the unit cost and simplification exercise which will look at how the MA processes claims received which fall under the Unit Costs (UC) model. LS is presenting this at Scottish Local Authorities’ Economic Development (SLAED) group tomorrow. Action four has been amended, but is awaiting another amendment at the Managing Authority Approval Panel (MAAP) meeting on 25 May 2022. The Minister had recently approved the last MAAP meeting in April, so this will also be updated. Actions 5 and 6 have also been updated. RG added CC has provided an updated for actions 7 and 8 to RB and himself, and CC had circulated information on unit costs. Action 10, the risk register, has not been sent out and this was an error. The last action, regarding the European Commission (EC) auditors, had been completed as they are present at this meeting.

ML noted that he appreciated that LS’s presentation to SLAED about the new streamlining process for operations converting to unit costs system. ML added that this is positive for the local authorities, but there is an issue of communication in the PMC more generally and it concerns communicating with PMC members in-between PMC meetings. There were expectations at the last meeting that members would get an update on the issues discussed prior to this PMC as we have only been meeting approximately every 6 months.

ML added that the updated Operational Programmes (OP) are not on the website and the versions available are still those approved by the EC in late 2019 to reflect the 2018 de-commitment. ML further added the website was checked yesterday and this is out of date, which suggests action four is still outstanding.

HP responded with confidence that the revisions have been made to the website.

RG agreed and asked RB for confirmation that the most recent OP is on the website. RB confirmed adding the issue may be caused by a change to the website updating process, resulting in a backlog as it is now updated outwith the division.

ML noted it was checked yesterday and was not available, at least on the public facing part of the website.

FG noted that CM made a good suggestion on this point, which was to send the link of the updated version of the OP. FG asked why the action regarding the minutes have not been completed.

HP summarised that we are going to make sure the website has been updated, send the link to all PMC members, send the revised minutes to all PMC members, and will also send the draft minutes of this meeting within a month of today’s date.

HP reiterated that the closure of the programme has been added to the risk register and this will be discussed later on in the agenda. The EC auditors are here this week and the work so far has not involved any direct contact with Lead Partners (LP), but our desk officers would like to visit some operations and projects at a future date.

Financial/operational performance update

HP summarised the methodology and proposal for revising the ESF and European Regional Development Fund (ERDF) OPs to reflect the 2021 de-commitment. Section 2 of the paper shows the changes to the de-commitment levels from the estimated figures from December and shows the confirmed EC figures as well as the reasons for the variation between the two sets of figures.

Section 3 and 4 set out the proposed operational amendments for ESF and ERDF. The details of how these figures will be readjusted are on the table at annex A. The next two graphs indicate our current position regarding claims being submitted against the forecasts for this year so far and the performance against N+3.

HP noted the importance of claims being submitted in line with the forecast in order to maintain the pace of payments and minimise any de-commitment. HP added that, historically we have been able to absorb de-commitment each year, but as we reach toward the end of the programme this will be increasingly difficult as there is no flexibility within the programmes to do so.

There may be some flexibility in the programmes, but we will not know the final figure until nearer programme closure. It is imperative that we are able to manage the pace and volume of claims coming through. This will be discussed in the claims summary, paper 4b.

HP opened up to comments and questions.

No comments or questions from members. HP asked members if they are content to approve the tables for the revisions on annex A. Members confirmed their approval.

Claims summary

HP stated that the PMC working group has been looking carefully at the issue of the slow rate of claims and certain areas of the claims process that have contributed to de-commitment. The tables present information gathered through the claims forecast and we have analysed the claims by different categories, showing the claims predicted for this year against claims received.

HP added there is a large variation in the figures and acknowledged that there are reasons for this, such as some claims already being on EUMIS which may block new claims, although this is not true in all cases. HP continued that this is one of the reasons for the letter sent out on Friday 13 May 2022.

HP noted that the second group of tables detailed the number of big claims over the next 4 months and the following two tables show claims expected in autumn and winter. HP added it is useful for CC, ST and herself to have these anticipated claim schedules from all LPs so that we can plan resources as accurately as possible. HP noted there will be changes and for this reason it is vital that LPs are able to revise their claims forecast as soon as they are aware of any changes.

HP continued that claims currently blocked by another claim can still be prepared offline so that all documentation can be collated on EUMIS prior to formal submission on EUMIS. HP added that there are still some LPs who have not submitted any claims forecasts, so we do not know when they will be submitting. There are also LPs, when submitting claims, that do not respond to reminders or requests for further information. HP noted these LPs are a minority but can still cause significant difficulties in dealing with the large amounts of claims anticipated over the following months.

HP stated that the tables toward the end of this paper set out the breakdown of claims where we consider there is higher risk. These have been broken down according to: claims where the activity ended before September 2020; claims where less than 50% has been claimed so far; claims over £5,000,000; claims where outputs/results are under 25%. HP added that below 25% for outputs was very low and although there can be reasons behind this, this figures must be improved.

HP noted that there are claims that fall into two or more of these categories and this data was discussed at an MA workshop in April to look at ways to address and improve the performance in these areas.

HP asked members if there are any comments or suggests regarding the claims position.

RG highlighted that this is an evolving picture and this information is reviewed on a weekly basis, but this is dependent on the information we receive from LPs. RG followed on HP’s point about not responding to reminders, and whilst there can be mitigating circumstances blocking submission of a claim LPs are asked to review and revise their claims forecasts. RG added that it is important to continually update and reflect on information and that it is very helpful to the MA.

ML agreed it is important to improve the pace of claims, but added it would have been helpful if we had known to what extent we’ve been able to improve performance in terms of the number and value of claims that have gone through the system. For example, there is a list of claims that have been paid since 2022, so how would this compare to the corresponding period in 2021. ML questioned if the improvements suggested at the PMC working group have shown signs of improving the flow of claims through the system.

ML recognised the challenge for N+3, but noted that on the claims pending on EUMIS for ESF there is a claim for almost £30m that is not impacted by UC which has been in the system for 291 days. ML said that if we are able to process all ESF claims on the system we would meet our N+3 target for 2022, although some would not count towards the target, being impacted by the UC exercise. ML added the claims on the system ought to be processed expeditiously as well as encouraging information from LPs where possible. ML acknowledged the point that a lot of background work can be done when a claim is still on the system, but another claim may not be able to be immediately added due to, for example, a change request which would require approval at MAAP. ML added that it would have been helpful to have a column indicating the dates of each claims paid in 2022 included in the paper.

HP thanked ML for the useful comments. HP mentioned that the £30m claim ML referred to is unusual and has unique circumstances involved which are being worked through currently. Although it has been on EUMIS for a long time, it is being processed as quickly as possible. HP added, regarding the date of payment, that all checks have begun and we request a payment as soon as possible by our treasury and banking team. However, the date they pay it is out with our control as it depends on the time of the annual cash and banking cycle within SG.

RG responded to ML, regarding improvement and performance, that this was also discussed at the PMC working group and one of the actions agreed was to take a paper and look at the performance over particular periods and discuss this at the next PMC working group. RG added we will look at improvements and where it is lacking, we will look for a solution to accelerate this. In terms of ESF, RG expects to see improvements.

ML noted that the streamline process is very helpful and will assist in the LPs getting funds, but will not help with N+3 targets as these use the unit costs methodology in terms of declarations to the EC.

HP stated it is worth remembering that the streamlining system, for those converting to unit costs, takes some pressure off resources so it will give those involved more time on other activities.

ML noted the streamlining process was one of the things that came from the PMC working group, but it had taken a long time to get to this stage from starting in summer last year.

CM stated that the letter sent last week, with the introduction of tighter deadlines for responses, hopefully will have an impact in the following months. CM added that there is a need for better communication from both the LPs and the MA, and the actions in the letter are intended to push more effective communication. For example, keeping LPs informed of what stage of the process their claim is at. Regarding HP’s comment on the annual cash and banking cycle, CM noted that even knowing it has been sent for payment would give the LP information on progression. CM added that, in terms of unit cost, it was be beneficial to see in these papers the MA progress on conversion to unit costs.

HP responded to MC, stating a discussion about arranging the next PMC working group will be arranged with RG. HP noted that one LP had responded to the letter stating the tightening of deadlines was useful to them as they are dependent on delivery bodies and it helps to persuade the delivery body to provide the information they require to finalise the submission of claims.

HP added a discussion has been held with growth team leaders of the importance of LPs being informed of the stage of their claims and the MA will also be able to inform the LP when a request to release payment has been made. HP added a summary of the position in conversion to unit costs can also be provided and this is something the auditors are looking at carefully.

FG noted the importance of consistent and coherent information between portfolio managers and the LP at every stage of the process, particularly if a claim is stuck at a certain stage as it would be useful to the LP to understand why this is the case. On occasion, the MA has to be pushed to provide this information, but this should be done automatically as part of the programme management process.

FG highlighted the claim performance, referring to table 1, noting that there is an evident impact caused by claims not received in the ESF forecast, but on ERDF over 70% of the claims are blocked. As a consequence, if all claims are submitted according to the forecast, that would not be sufficient to improve performance. FG continued that it would be useful to understand what is causing these blockages. On table 5, only certain claims have been identified as being blocked in August. For example, Scottish Enterprise (SE) has one claim under each SI, so all Strategic Interventions (SI) are blocked for submitting claims and yet only one is identified as being blocked in August.

HP responded that if a claim is still on the system the LP should be informed why the checks cannot be completed and what further information is required.

FG replied that that has not happened and cited Scottish Enterprise as an example. SE has provided information quickly and yet claims submitted in January have not been paid. In general, it will be useful to see why it is taking so long.

HP noted that there can be consistent information and communication with LPs about the stage of their claim, but it cannot be the same information as we have a wide variety of types of claims and types of checks that need to be done, so it will not be the same in all cases.

HP added that it is true ERDF have around 70% blocked, but that does not provide an indication of the size of claims on the system, therefore it may be that the bulk of the value of claims exists within claims not received and not blocked. 70% of the value is therefore not necessarily in those claims.

FG responded that if we look at table 1, 20% of the value of claims in the forecast has been blocked by claims in the system.

RG replied to FG stating that the issue regarding communications is being addressed within teams and the division to help speed up the claims process.

KM noted this paper is extremely useful and it is the type of information we have asked for in previous PMC meetings. KM added that the paper has the correct level of necessary detail to be able to make informed decisions. KM added that it is possible to build further on this document and it would be useful to have a more comprehensive picture as this does not show all the claims in the system. It would also be beneficial to have a picture of all SIs and what all total amounts are as well as the retrospective positions of individual SIs to get clarity on the entire programme. KM continued that recommendations can be made on how to build on this information for the next PMC meetings.

Following on from a point made by FG, KM stated that from the figures for ERDF it is clear that this issue of claims blocked by other claims is the biggest risk of meeting this year’s N+3 targets. If the same 30% is applied on the forecast going forward, N+3 will not be met and will be missed by approximately £20 million. KM added this does not take into account other claims already on the system from previous years. The PMC working group ought to be reconvened rapidly and repeatedly to follow up on the consequences of these actions and if we see improvements and acceleration in claims coming through.

KM noted that having a PMC meeting every 6 months leaves a long gap between meetings. KM followed on from RG’s point about the forecasts adding that the margin for slippages is gone as we only have 18 months left to be able to incur eligible costs. These eligible costs will still need to be declared by the MA and verified for the final payment claim which is due in July 2024.

HP welcomed KM’s comments and added another PMC working group will be reconvened in the next few weeks. In terms of the margin for slippage, we will see in terms of the closure risks later in the meeting. HP noted the MA has reiterated to LPs the importance of the deadlines as they may not be extended any further at this stage in the programme.

RG added that there was plans to hold a PMC working group early in September with the focus being on comparing quarterly performance but this will be brought forward.

HP responded that it is important to reconvene in July at the latest.

KM noted that one of the possible consequences is that some of the allocations might come back to the programme and some operations will not be able to spend their grants they were entitled to. The MA will need to assess where to absorb potential underspends.

HP agreed and stated that there will need to be a re-balancing.

PM stated that the risk for de-commitment by the end of this year is serious. PM noted the option for the 100% co-financing that has been launched, which is important as if Scotland accepts this then claims ought to be submitted as soon as possible as there is not much time left for this option. PM noted it is important for two reasons, firstly, the ESF suspension would be lifted and create additional liquidity within the system. Secondly, for N+3, it could have a very beneficial effect. PM recommended that LPs and the MA to try to get as much claims in as possible in this accounting year.

HP noted the MA are acutely aware that the 100% co-financing rate has been extended to June. PM added it is the end of this accounting year so either June or July. HP added that it is a good idea to maximise the use of the 100% co-financing rate, although it is vital we do not cut corners to avoid risks.

SF understood concerns around the co-financing rate and there must be certainty that the cost claim and all expenditure is compliant. SF noted that the financial tables prepared show £7.4m has been paid out instead of £31m for the first 4 months. This clarifies the need to try to forecast a little more accurately as well as properly considering the speed of getting cost claims in as it is urgent.

HP added that this is why the letter issued specified this. HP stated that she can do as much as possible to ensure that teams within the division process correctly and as swiftly as possible, but to we are largely dependent on the completeness and quality of the information given to support each claim, so we can only do this by joint efforts.

KM followed on from PM’s point adding that we need to be made aware if you are making use of the 100% co-financing rate and in previous accounting years this was an amendment to the programme. This is no longer necessary, but it still requires notification to the EC. KM added doing so will add the 100% co-financing rate retroactively to the claims sent until during the accounting year 2021-2022.

ML noted this was the first time hearing of the extension to the 100% co financing facility. ML asked if the scope of the 100% co-financing rate is still limited to measures undertaken as a response to COVID-19. If this is more broad ranging, then what will be the impact on LPs who submitting claims during the accounting year in question at a given fixed rate of co-financing. ML questioned the impact on LPs of a request by SG to extend the use of 100% co-financing rate.

PM responded adding that the reason ML may have not heard is because this is very new having been updated in April but still awaiting practical implementation. Secondly, this 100% co-financing rate should apply to all claims indicated as such by the committee. A formal decision should be made on the 100% co-financing rate on this occasion so that no more programme amendments are required. PM used the £7.4 million which had been paid out instead of £31 million for the first 4 months as an example, stating that the 100% co-financing rate would apply to the £31 million.

PM agreed with HP and stated there is no insistence the MA should cut corners, but considering all the necessary procedures, the time to agree on this is even shorter.

ML thanked PM for the additional information. ML noted in principle there is no reason not to use the 100% co-financing rate, but there is a responsibility to ensure we fully understand what is being endorsed. This would require a prompt written procedure so the implications of this are known. An issue could arise, for example, if audit took exception to the inconsistency between declared previous match funding requirement with what took place as a result of the change in rules to allow 100% co-financing. ML added that this shows a more detailed paper outlining the scope and implications of accepting that.

HP noted this point, and stated that hopefully all PMC members agree in principle to accept this 100% co-financing. It will need to through the formal notification to desk officers and this will be done as soon as possible before the end of May.

RG added to the point made by HP that we have members present and therefore ought to approve this in principle today. More detail could be provided as a follow up if required but felt that a written procedure was not necessary as members should be in a position to approve today.

RB acknowledged ML’s point, but argued that a written procedure was not necessary, particularly when the 100% co-financing is going to be applied in the same manner way as last time. It is simply regarding how the MA will claim expenditure from the EC, which will help with N+3. RB added it would be better to have this agreed at this stage in order to avoid delaying the process.

ML noted concern about making serious decisions in the absence of written information and this would not be an acceptable way of transacting important business. ML stated the PMC ought to be treated with due respect and that this is an important decision which requires a written document. ML noted that the beneficiaries of this would not be the individual LPs, who would continue to be reimbursed at the same rate, but might be viewed as a windfall benefit for the MA. There will be an indirect benefit as it helps with N+3.

RB noted ML’s point, and asked if members would agree in principle and followed up with more detail rather than write a paper.

HP stated that we need to set out a background to this explaining why it is being put forward by the EC and what it will mean for both LPs and the MA. An agreement in principle today will be subject to having an explanation of how the 100% co-financing will work. A paper will sent in the following weeks, but will be a summary.

PM stated this is purely liquidity and is not additional money or new money for SG. It is just advancing the money of the programme and is not SG making more money as a beneficiary. In fact, the beneficiaries, in theory, receive the ESF and public money and it is the public money that is ‘pre-financed’ by the EC, which will have to be given back later in the programme as the total budget will not change. PM added that this liquidity will also be beneficial for LPs and will help mitigate the risk of de-commitment.

ML noted that the context is with the ESF in particular which is showing over-commitment, so if more of the expenditure is being reimbursed at 100% that leaves less for next year. Therefore, is this a short term solution for 2022 that will have consequences in 2023 if there is no ESF left to pay out.

PM stated that for the N+3 there is the situation of over-commitment, but if we do not take the 100% co-financing, the problem of de-commitment will increase the problem of the over-commitment of the programme. The 100% co-financing could help and would not make the problem worse. PM added it would not change anything for funding in 2023.

RB added that the 100% co-financing does not change allocations, so all it means is SG receives this money quicker and all that will be paid out is our committed funds. There would not be any less money next year and at the end of the programme there will be a reconciliation exercise to ensure we have not received more from the EC than what was paid out to LPs.

ML noted this would a useful point to make in the paper.

HP stated a summary paper will be created to explain the context of this. HP asked if, in principle, members are content to notify the commission we intend to proceed with the 100% co-financing rate. Members are content.

Communication update

HP summarised that the annual publicity event took place on 14 December 2021r and the publication of the case studies report, which received positive reviews. The spring LP meeting occurred last week and we have had some website, blog and social media interest as well as media coverage, which is set out in the paper.

HP asked if there any suggestion about how the publicity for the programme can be promoted in better ways. No comments or ways to increase the effectiveness of communications were offered by members.

Evaluation strategy update

HP stated that the paper summaries the evaluation strategy that is underway. The timetable on annex A shows what has been completed. The evaluation of the funding in the Highlands and Islands was completed in March 2022 and the smart growth and inclusive growth evaluation has started. The low carbon thematic evaluation is due to start in autumn and the ex-post programmes evaluation in 2023/24. The work done in recent evaluations has been high quality, fair and comprehensive in how it was presented.

HP asked if members have comments.

ML agreed with HP on the quality of the evaluations for the delivery, structures and partnership working as well the paper on specific issues relating to the Highlands and Islands, and that the conclusion of this would apply across the rest of Scotland. ML noted paragraph 7 and thought the consultants did not quite say the funding commitment for ERDF and ESF were ‘very high’, only ‘high’. At no stage where we close to fully committing the ERDF programme. Across the EU the commitment rate for ERDF programmes is 113% and for the UK 108%, where as it is 88% across Scotland.

ML noted this is disappointing and this has never been above 90% at any stage. The proposed evaluation on the low carbon theme did not attract suitable candidates and ML raised the possibility of a retendering exercise producing the same negative result and asked how this could be avoided.

HP responded that it was always been the case that that ERDF has been under-committed, but is unsure why. HP added this needs to be looked at in detail for lessons learned. HP asked RG, regarding the tendering exercise, if he could answer ML’s point about why no suitable candidates came forward.

RG noted that it was the pressure of work at that particular time, the consultants asked to submit bids did not have the capacity to bid for this contract. When time permits, RG is proposing to run a workshop for potential suppliers who may be interested in bidding for this contract. When we have a piece of work coming up, potential suppliers are contacted and it is done this way so it is open and fair competition. Procurement colleagues were consulted when the tender was drafted and members were invited to sit on the evaluation panel to look at and assess tenders coming in. RG recorded his disappointment with the lack of tender responses particularly as the other 3 evaluations have been successful and there are plans to address this in the future.

RG added that the figures in the report were accurate. ML responded that 88% commitment does not represent ‘very’ high performance. RG responded that the language used here comes directly from the report, but will check this and will amend this if incorrect.

ML stated the figures are fine and that the key point is semantics notwithstanding was the underperformance in terms of commitment of the ERDF programme.

HP responded that this situation is unique to Scotland and needs to be addressed.

KM expressed endorsement for this exercise and the EC has been absorbed in financial progress and at times have lost track of what we are trying to do with the programmes. These evaluations are perfect instruments to take a step back as a  PMC to look at what achievements are being made with the programmes.

KM continued for the Highlands and Islands report, this would merit a presentation and discussion to look at the achievements of the programme.

HP agreed and the focus, at the moment, has to be on the claims, outputs and results.

RG stated, regarding engagement with Highlands and Islands members, there is a standing invitation for colleagues to have that session and presentation summarising the main findings of the evaluation.

KM noted there is a lot of overlap between Highlands and Islands Territorial Committee (HITC) and the PMC, but the PMC should also be able to discuss this in the context of the PMC and not just in HITC.

RG noted the comments were in reference to the Highlands and Islands evaluation and that separate sessions had been organised for the PMC and other LP groups.

Risk register

HP noted the risk register was circulated yesterday and apologised that it was not circulated the previous week with the rest of the papers. The risks 1-8 have been updated in minor ways, such as dates, references to the LP event last week, but the key change to the risk register is to add the risk concerning closure and the failure to implement closure, to meet the deadlines and to so in a compliant way. This is the biggest risk ahead of us. The controls in place in the action plan refer to a number of things under way that concern setting up the closure co-ordinating group and decision making group with the appropriate forms of reference.

HP continued that there are likely to be sub-groups in order to deal with specific work streams. These groups will make reports and in the future there will be papers on the closure provided to the PMC and to the internal programme board for structural funds and also to the internal SG insurance and risk committee at directorate general level. There is a project management document for the completion of the programmes to manage the work streams, the responsibility, the governance and the deadlines for this. There is a communications and engagement plan and the communications on the closure deadlines is within this plan which has already been shared with LPs.

HP stated if members have suggestions about how to improve communications about the closure, then this would be helpful. The resourcing is being looked at in terms of the work needed to be done between now and summer 2024 to ensure that all aspects regarding the completion of programmes is dealt with correctly. HP noted the deadlines are extremely tight considering the work that needs to be done. There is a resourcing plan for the MA, which is an annual resourcing plan as well as a 3 year plan. Audit trail will be important and requirement must be followed in detail so that documentation can be found and tracked.

HP asked if there are any comments or questions.

FG stated that, in the last two PMC meetings, it was raised whether the MA will be able to process all claims within the available timescale. FG noted that the current commitment is a legal obligation for SG, and therefore LPs who have met the grant conditions by the time the programme finishes will not be out of pocket.

FG continued that there is a grey area of what we consider what has or has not met the grant conditions when it comes to the submission of claims. We have seen from the claim analysis that numbers of claims have blockages in the system and LPs cannot submit subsequent claims. RG asked where the risk sits if at some point LPs will not be able to submit further claims due to these blockages.

HP noted there is not a blanket answer as it will depend on a case-by-case basis. Both the MA and LPs have legal obligations, including those in grant offer letters and it will depend on the situations that individually arise. HP stated it is fundamental that we process all these claims before the end of the deadline.

FG noted that the possibility of claims not being paid is becoming a risk for some LPs. There are cases with claims still in the systems with no evidence ineligibility. While there cannot be a blanket answer, there might be a need to engage on a case by case basis with individual LP to understand the position of each LP.

HP agreed this is the only way to do this. HP asked if there are any other issues on the risk register. No comments from members.

ESF suspension update

HP stated that the European auditors are in Scotland and will hopefully meet with them on Thursday. HP noted JIJ has met with them.

JIJ stated that they were working on procurement checks, and unit cost methodology, and are not expecting feedback this week although there will be productive discussions. JIJ noted information will be shared as soon as available.

PM stated that the report by the AA was submitted on Friday which mentions the procurement checks is now in category 2. PM noted these are positive steps forward.

HP asked RG if there was anything else to add. RG responded that the work of the PMC working group is essential and the next meeting will be scheduled to take place in July. RG expressed gratitude for the for work of the PMC working group.

HP noted the tangible points of progress on issues which would not have been accomplished if not for the PMC working group.

HP asked if there are any questions regarding the PMC working group. No additional points or questions were noted.

Any other business

HP asked if there is any other business.

KM noted the AIRs and that it was unfortunate it was not on the agenda for today. The deadline for this is not the end of June, it is the end of May. This means we have only 10 days to endorse the implement reports and sent it to the EC.

HP stated it is ensured that this will go out as soon as possible and we may need to discuss with desk officers about the draft as well so it reaches expectations. The delay was to allow LPs further time to update and record outputs and results on EUMIS to provide a better reflection on programme implementation.

JIJ stated that there is not normally direct contact with the Audit Authority (AA), so if there is any direct questions this can be done in a follow up.

ML stated it is helpful to have the AA attend these meetings as it is beneficial to understand these issues from their perspective.

HP stated the next couple of PMC working group meetings will be scheduled over the next few weeks and schedule another PMC meeting, but in the meantime, we will in touch with the AIRs next week and the minutes of this meeting will be distributed within a calendar month.

HP thanked everyone for their input and concluded the meeting.

Actions

• AIRs to be sent to PMC members week starting 23/05/22 and submission to EC by end of May
• check Scottish Government website showing up-to-date OP revisions
• draft of PMC minutes sent to PMC members by mid-June
• next PMC papers to include financial performance of current year, compared to 2021 and unit cost claim update
• update to PMC members on:
  • suspension
  • end June declaration
  • streamlined approach for UC converting operations
  • claims paid/new claims received
• improved communications request regarding status of claims with SE and growth team leaders to ensure all PCMs having maximum engagement with all LPs
• set dates for next 2 PMC working group meetings
• summary paper on 100% co-financing rate sent to PMC members following agreement in principle
• formal notification to EC of intention to utilise 100% co-financing rate