This is a special bulletin from MHCLG to provide an update on our work in response to COVID-19 for the 2014 to 2020 European Regional Development Fund (ERDF) Programme.
Since our last special bulletin at the start of April, we have continued to work across government, with our partners and with the European Commission, to develop measures in response to COVID-19.
The details below provide a summary of the work that has been delivered and the future direction and priorities for the Programme.
Progress to Date and CRII+
In developing our COVID-19 response, we have introduced a range of flexibilities to support projects with implementation and ensured that payments continue to flow to those who are experiencing delivery difficulties at this time.
We also wanted to make you aware of how the ERDF Programme is responding to two specific flexibilities provided by the European Commission in its Coronavirus Response Investment Initiative (CRII) and CRII+ regulations:
- Greater flexibility to fund more of a project’s costs (the intervention rate). This is an emergency measure that enables us to fund up to 100% of a project’s costs for a limited period. In most cases, match funding remains in place, and will continue to be vital for ERDF projects. This flexibility means we can now fund a limited range of projects at a higher intervention rate, specifically COVID-19 response activities that address priorities across the country (e.g. The Reopening High Streets Safely Fund described below) or business support projects that are wholly reliant on SME match funding.
- Businesses experiencing short term financial difficulties may be classified as Undertakings in Difficulty (UiD). UiD were previously ineligible for ERDF support. EU regulations have now been permanently changed to allow ERDF to support UiDs where this is allowed under State Aid rules. We have updated our guidance and rules on this, which will enable more businesses to access important support at the current time.
New Priorities and Responding to the Impact of COVID-19
Since the start of the COVID-19 crisis, we have been engaging with many of you and other stakeholders to consider how we can best respond quickly and effectively to the economic impacts of COVID-19.
In May the £50 million Reopening High Streets Safely Fund was rolled out across England, to help councils support their high street businesses and local businesses with advice and extra social distancing measures, as towns and cities start to reopen.
Further work is underway to develop a bespoke package of support for Visitor Economy businesses to help them adapt and improve their resilience. We are also developing other plans for providing further targeted support to businesses and communities in response to COVID-19, building on our strong record of funding business support and advice.
We also continue to work with our partners to move forward the ERDF project pipeline. We are prioritising projects that provide immediate assistance to urgent Covid recovery needs which in turn help with local recovery plans.
Work is also focused on reviewing plans for utilising remaining unallocated ERDF funding, including the mechanisms by which we bring these to fruition. During June and July we are developing investment options. Our considerations include:
- Available resource, taking account of new COVID-19 commitments such as the Reopening High Streets Safely Fund, and pipeline attrition;
- Ongoing need to manage foreign exchange fluctuations which can have a significant impact as the programme approaches full commitment;
- Addressing emerging recovery funding requirements;
- Alignment with other government initiatives and local recovery plans to support the economy; and
- Capacity to administer and operate calls for proposals (both within MHCLG and potential applicants), as well as timing of approvals.
Taking all this into consideration, the current circumstances and remaining programme timescale mean that we no longer expect to launch England-wide ERDF Reserve Fund calls for proposals and will instead be using more targeted and rapid ways of funding remaining activities, such as through a commissioning model.
Updates and Developments
At the end of March we created a COVID-19 ESI Funds page on GOV.UK to provide the latest information on our response and key information for grant recipients delivering ERDF projects. This houses a Q&A for ERDF, along with those for ESF and EAFRD, which we continue to update regularly. This is supported through our programme bulletins and Twitter profile ensuring messages are widely shared with our partners.
We will continue to keep you updated with progress on our activities, including investment options for remaining unallocated ERDF as mentioned. We want to take this opportunity to thank you again for your support to ensure that ERDF delivers for our communities during this period and beyond.