European Union Funding

The European Union budget is made up of a proportion of the VAT charged on goods and services in the Member States, a share of each countries Gross National Product and custom duties from non-EU countries on goods which are imported into the EU.

A large proportion of these resources are redistributed into four Structural Funds each used to promote the economic and social development of the regions perceived to be lagging behind.

A region may have access to one or more of the four Structural Funds, depending on whether it has Objective 1 or 2 status; all regions have Objective 3 status. The four Structural Funds are:

  • The European Regional Development Fund (ERDF)
  • The European Social Fund (ESF)
  • European Agricultural Guidance and Guarantee Fund (EAGGF)
  • The Financial Instrument for Fisheries Guidance (FIFG)

The European Regional Development Fund (ERDF)

The European Regional Development Fund (ERDF) was set up in 1975 to stimulate economic development in the least prosperous regions of the European Union (EU).

The ERDF aims to improve economic prosperity and social inclusion by investing in projects to promote development and encourage the diversification of industry into other sectors in areas lagging behind. This fund is available in Objective 1 and 2 areas.

ERDF is aimed at economic regeneration projects promoted by the public sector. This involves:

  • Government Departments
  • Regional Development Agencies (RDAs)
  • Local Authorities
  • Further and Higher Education establishments
  • Other public bodies
  • Community and Voluntary Sector organisations

In certain circumstances, the fund can help the development of small and medium-sized enterprises (SMEs). Private sector companies are encouraged to present applications in partnership with a public sector body.

Individuals may not apply

There is no limit set for ERDF projects. Projects may request up to 50% of the total costs from ERDF. The rest of the funding, known as 'match funding' comes from other sources such as:

  • Regional Development Agencies
  • Local Authorities
  • Government schemes including the Single Regeneration Budget
  • Other Public Bodies
  • The Private Sector
  • Paid Staff and Volunteer time

You can find a guide to potential sources of match funding on the Department for Business, Innovation and Skills website.

The European Social Fund (ESF)

The ESF funds training, human resources and equal opportunities schemes to promote employability of people in both Objective 1 and 3 areas.

ESF is the main source of finance that the EU uses to help create and protect jobs. It supports the National Action Plan for Employment (NAP) which is produced every year. The NAP sets out the main UK policies and initiatives in line with the European Employment Strategy. It is written by the UK Government for England, Scotland, Wales and Gibraltar.

The ESF is used to give financial support towards the running costs of projects run by a variety of organisations. These projects can include those for training, employment, education, research and childcare. ESF also supports Government programmes, including New Deal.

The whole area of eligibility for European funding is a complex one. If you meet the following criteria you may be eligible to apply for European Social Funding.

You are a legally constituted organisation (i.e formed with a legal document such as an agreement of memorandum of association). Large companies are eligible to apply for ESF providing they work in partnership with small and medium sized enterprises (SMES) and at least 50% of the beneficiaries will be from SMES.

Individuals cannot apply for European Social Fund money.

Your organisation is involved in an activity in one of the supported measures and is currently in receipt of financial support from the public sector (typically 10% of total costs).

Active Labour Market Policies

Measure 1: To provide advice, guidance, and support to enable people to develop active and continuous job search strategies and prevent them from moving into long term unemployment.

  • supporting additional measures to enhance the UK's active benefit regime
  • active and guidance
  • enhancing advice, guidance and community education through innovative systems and approaches
  • involving business in schools to encouraging employability and motivation
  • early interventions, including advice and guidance, using new forms of Information Technology
  • improving job brokerage to enable a better match between supply and demand

Measure 2: To improve the employability of the unemployed returners and young people of working age through targeted intervention to enhance vocational and other key skills and remove external barrier to labour market entry.

  • providing support through integrated approaches, including the provision of vocational social and key skills including confidence building
  • job rotation initiates for the very long term unemployed
  • encouraging unemployed people to start their own businesses
  • encouraging local partnerships approaches to Intermediate labour markets projects and assisting unemployed people in the open labour market
  • improving the capacity for community development

Equal Opportunities and Social Inclusion

Measure 1: To widen access to basic skills, directed at those groups disadvantaged, excluded or under-represented in the work place

  • supporting intensive interventions to meet the needs of the client group through vocational guidance, training and employment support measures.

Measure 2: To provide help to improve the employability and remove barriers to labour market entry for those groups disadvantaged in the labour market and to develop local responses to assist individuals with multiple disadvantage in the labour market who face the risk of social exclusion.

  • providing intensive support to enable target groups to reach levels of basic employability
  • supporting pre-entry training related to identified labour market needs
  • providing integrated packages which meet the needs of lone parents and returners
  • customised training related to labour market opportunities (including those specifies in the NWDA Strategies)
  • capacity building actions to ensure that ESF reaches those groups in the greatest need and to encourage local development and community delivery of ESF activities

Measure 3: To combat discrimination in the labour market, in particular to combat race, disability and age discrimination and improve the employability of these groups.

  • researching into institutional discrimination and follow on actions to combat discrimination
  • supporting initiatives to improve recruitment and promotion systems to eliminate institutional discrimination

Lifelong Learning

Measure 1: Promoting wider access and participation in lifelong learning (especially those groups least likely to take part in lifelong learning activities and lacking basic and key skills)

  • supporting collaborative action through Learning and Skills Councils, Local Learning Partnerships, Further and Higher Education Establishments and through SMEs
  • providing individuals with ICT skills
  • providing individuals with basic and key skills and reducing the risk of those with inadequate skills falling behind
  • extending access through more innovative means, including community and family, and through helping individuals develop and manage their own learning
  • the identification and promotion of means which can open up access to learning for those adults currently least engaged with the education system

Measure 2: Improving employability through directing and supporting lifelong learning provisions that it is responsive to the changing needs of employers, such as in the fields of IT, management and the environment

  • supporting businesses especially SMEs by equipping the workforce with the right skills
  • skills forecasting and ensuring that skills training relates to the RDA regional economic strategy
  • forging links between business and support networks

Adaptability and Entrepreneurship

Measure 1: To update and upgrade employee's vocational skills including basic and key skills

  • promoting employee development by updating and upgrading vocational skills, while considering new methods of delivering basic skills - provision of advice and guidance, training trainers and managers and promoting the effective use of ICT in SMEs
  • equipping workers threatened with redundancy with training and funding to turn good ideas in to viable businesses and supporting innovation and creativity.

Measure 2: To identify and meet emerging skill shortages, including higher level

  • identifying skill shortages within all sectors, including new skills emerging from the knowledge driven economy
  • providing training to meet identified skills shortages, including innovative methods of training delivery
  • promoting effective training investment by employers and improving the awareness of identified skill shortages with teachers in schools

Measure 3: Encouraging entrepreneurship of individuals and competitiveness of business, particularly SMEs

  • supporting SMEs to expand and create new employment opportunities
  • researching into new forms of work organisation - flexible working practices with consideration given to family friendly policies and strengthening the links between employers and educational or training institutions, especially in the fields of science, technology and research.
  • supporting individuals setting their own business such as advice on regulatory aspects, recruitment and business planning.

Improving Women's Participation in the Labour Market

Measure 1: To improve access to learning and remove barriers to employment

  • improving the quality and flexibility of local training including participation in lifelong learning partnerships
  • improving the relevance of skills training to local employment needs and opportunities
  • tackling barriers, such as childcare and other caring responsibilities, raising awareness and promoting family friendly policies
  • providing vocational training for one to enter non traditional occupations
  • the development of entrepreneurs, especially amongst those who have been out of the labour force

Measure 2: To research into issues related to gender discrimination in employment such as recruitment, pay, segregation and progression

  • research and development of practical recommendations to combat occupational segregation, gender stereotyping and institutionalised discrimination on recruitment, pay, progression and other aspects of employment
  • activities to implement the recommendations arising from the above research

Your application for funding is towards running costs only. Individual items exceeding £1000 are not eligible. Other ineligible costs include:

  • loan and current account interest
  • other financial charges
  • consultancy fees for activities such as filling in applications, or management fees or commissions
  • staff time spent filling in applications
  • buying equipment or buildings (threshold currently £1,000)
  • costs of finance leases
  • charging again for equipment or buildings which have previously attracted EU funding
  • any expenditure that does not clearly relate to the project
  • any expenditure which is not supported by written sources

As this is a complex area you may wish to discuss in greater detail your eligibility to apply for European Social Funding by contacting us.

ESF pays for a proportion (usually 45%) of a project's costs. The remaining amount (at least 55%) is known as match funding. Match funding can come from both public and private sources but at least 10% must be provided by a public body.

ESF will contribute to any actual eligible costs spent in carrying out approved activity. These can include for example staff and utilities (gas, electricity and water) costs. A full listing of ineligible costs is available in the guidance.

Projects are scored, appraised and selected through competitive bidding at the regional level.

To be successful the project will at least:

  • add value (in other words, would not take place or would be less effective without ESF support)
  • give good value for money
  • contribute to meeting the ESF Objectives or Community Initiative (and therefore, the National Action Plan for Employment)
  • meet the more specific targets and requirements of the appropriate Regional Development Plan

ESF support is available between 2000 and 2006 under the current EU regulations. This is known as a "programme period". Organisations can apply for more than one project during this period. Individual projects are not usually supported for longer than 24 months at a time, although additional funds may be applied for later.

European Agricultural Guidance and Guarantee Fund (EAGGF)

EAGGF is available in rural Objective 1 areas to encourage the restructuring and diversification of rural areas, to promote economic prosperity and social inclusion, whilst protecting and maintaining the environment and our rural heritage. In areas outside Objective 1, the EAGGF (Guarantee section) provides funding within the England Rural Development.

The Financial Instrument for Fisheries Guidance (FIFG)

The FIFG funds projects to modernise the structure of the fisheries sector and related industries and to encourage diversification of the workforce and fisheries industry into other sectors. It also aims to ensure the future of the industry through achieving a balance between resources and their exploitation.

More detailed guidance on funding from the European Union is available on the European Commission website.