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European Structural Funds Operations



Partnership Agreement

Partnership Agreements are being established in line with the Commission’s draft proposals for the 2014 – 2020 funding period. The Partnership Agreements will set out how Member States will invest Structural Funds to meet European ambitions. The UK Partnership Agreement will be negotiated with the Commission and Scotland will have its own chapter. This will allow us to set out specific challenges and opportunities in Scotland which might not apply in the rest of the UK; and will allow us to tailor our Operational Programmes to support Scottish Government investment priorities.

Operational Programmes

For the 2014 – 2020 programming period, and specifically relating to Structural Funds, the Highlands and Islands have been designated as a transition region and the rest of Scotland as a more developed region. However, they share many of the same development challenges and opportunities, and after many years of distinction, may have broadly the equal and proportionate funding allocations. To simplify integration between the Structural Funds and Rural Development and Fisheries Funds, and to better align with national domestic programmes, it is proposed that these regions will form a single unit for the Operational Programmes resulting in there being four Operational Programmes covering ESI funds in Scotland:

  • A Rural Development Programme (SRDP);
  • A Social Fund Programme (ESF);
  • A Regional Development Programme (ERDF); and
  • A Maritime and Fisheries Programmes (EMFF) – coordinated at a UK level but supporting projects in Scotland.

While there will be one programme for ESF and ERDF these will clearly set out funding allocations for the transition region, ensuring that projects can continue under the Structural Funds across Scotland.

Simplified Costs

What are Simplified Costs?

There are three different types of simplified costs:

  • Unit Costs – funds will be paid on basis of quantified activities, outputs and results, multiplied by the unit costs agreed by the Managing Authority (MA) at application. Unit costs typically apply to identifiable quantities such as training hours, training modules finalised, job outcomes etc… The grant is therefore paid on the basis of physical progress of the operation, without justification of underlying real costs.
  • Lump Sums – all eligible costs are reimbursed on the basis of a pre-established lump sum in accordance with a pre-defined terms of agreement on activities and outputs. The grant is paid if the pre-defined terms of agreement are met.
  • Flat Rate – this approach involves the declaration of indirect costs as a % of direct costs claimed. The rate applied will be decided by the MA. All direct costs must be evidenced through a full audit trail and claimed on the basis of real costs.

Why change the way costs are claimed?

In the 2007 European Court of Auditors annual report it was suggested that the majority of errors found in Structural Fund programmes are partly due to the complexity of the legal and implementing framework and the report recommended to simplify “the basis of calculation of eligible cost and making greater use of lump sum or flat rate payments instead of reimbursement of real costs.”

In 2008 the European Commission committed itself to a series of measures to widen the possibilities for eligible expenditure to be claimed on a flat rate basis for all European Structural Funds. Further to this commitment the Commission published their ‘Simplification Agenda’ which will underpin the 2014 – 2020 European Structural Fund Programmes. The Simplification Agenda should reduce the administrative burden for both the Managing Authority and Delivery Partners.

What work has been done to date on establishing Simplified Cost Options?

As part of the Technical Assistance call for funding the Scottish Government are leading on a Simplified Costs project which will:

  • Develop an assortment of simplified cost models for all sectors/business areas which will receive European Structural Funds in the future programming period;
  • Test these models in line with Scottish Government compliance and audit requirements before presenting their recommendations to the European Commission for comment; and
  • Establish guidance and management structure for the simplified cost options identified.

As previously stated the project will cover all of the sectors which will receive European Structural Funds in Scotland:

  • Third Sector – represented by SCVO;
  • CPPs – represented by Dundee CPP;
  • Strategic Delivery Bodies – represented by Scottish Enterprise;
  • Further and Higher Education – represented by SFC, UHI and WoSCOP; and
  • National Delivery Bodies – represented by Skills Development Scotland.

This project is working alongside another TA project (UHI – Lessons Learned from the 2007 – 2013 Convergence Programmes in Highlands and Islands) which will produce a value/benefit assessment of various costing methodologies and the simplification agenda.

The project is working to a tight timescale as it will feed into a number of other areas being worked in for the development of the Future Programmes. The table below provides an overview of the timetable for the project:



Date to be Completed By

First Draft of Simplified Cost Models to be established and submitted to MA and AA for comment

2 September 2013

MA and AA to provide feedback on draft models

31 October 2013

Revised models to be drafted and submitted to Commission for comment

29 November 2013

Final models to be submitted to MA and AA for approval

23 December 2013

Guidance and Management & Control Process to be published

23 December 2013

In addition to the TA project, Scotland is host to the European Union's workshop on Simplified Cost Options on 10 September 2013. The papers from this workshop can be found here: http://sh45inta/Topics/Business-Industry/support/17404/Post2013CohesionPolicy/Operational/SCOWorkshop

Performance Framework

In this programming period, across the EU there have been major problems with interpretation of indicators, unclear guidance and definitions of what is being measured, and this has led to over and under-achievement of programmes against targets. The Commission, Managing Authorities and project sponsors are keen to avoid some of these issues, by trying to ensure that indicator definitions and guidance are as clear as possible, avoiding misinterpretation.

Both the ERDF and ESF programmes will be measured through core (compulsory) indicators which are set by the European Commission and must be reported against, and programme specific indicators, which will be developed alongside the future ESF and ERDF programmes, and which will be agreed by the Managing Authority.

We have mapped targets from the Europe 2020 strategy (key measurement for the Partnership Agreement); Government Economic Strategy; key stakeholders’ own performance frameworks; and core indicators for ESF and ERDF. The mapping exercise has been very useful, not least in showing up some gaps in alignment of Europe 2020 and proposed activities – e.g. there is no Europe 2020 target for SME competitiveness. The draft performance framework was well received by the Indicators working group, who had provided their organisations’ performance frameworks for use in the exercise.

Future work on the framework will be around establishing measurement of ‘distance travelled’ in employability projects, and playing a key role in contributing to the development of the programme specific indicators.

IT system

The IT project is specifically looking at the 2014 – 2020 data capture requirements in line with draft regulations. The main objective of the project is to build an IT system which supports the management and administration of the Structural Fund programmes in the 2014 – 2020 funding period.

The Scottish Government project team has liaised with stakeholders to develop an understanding of the lessons to be learned from the current Eurosys IT system and are currently in the process of developing options on how to take the IT project forward.