ERDF Reserve Fund 2020 priorities announced

The ERDF Reserve Fund - investment priorities for 2020

What is the reserve fund?  
In August MHCLG set out their plans to launch a new type of call in early 2020 – the ERDF reserve fund.  
The reserve fund is designed to ensure we invest the full value of the ERDF programme, maximise local growth opportunities, maintain a strong record in value for money, achieve programme output and spend targets, and manage currency fluctuations successfully. 
This article sets out MHCLG's approach to the reserve fund in more detail and is designed to help partners and potential applicants to develop project ideas in advance of publication of the calls next year. 
How will the reserve fund work?  
The reserve fund will draw together the remaining unused ERDF LEP area allocations into a new ‘fund’, operating at national level. England-wide calls will be launched at Priority Axis level, with separate amounts of money identified for each ‘category of region’.   
Separate calls for Sustainable Urban Development projects in England’s core cities may continue. Separate calls may also continue in Cornwall and the Isles of Scilly, due to its position as the only part of England with Less Developed status.
All projects will be expected to make a good contribution to programme objectives, domestic strategic priorities and programme targets. These are set out in the Operational Programme and will be described further in the calls for proposals.   

Deliverability is a fundamental consideration at this stage in the ERDF programme and applicants should ensure that potential projects are supported by a robust assessment of need, viability and well-developed delivery plans. Speculative projects will not be supported.   
Alignment with local plans is an important consideration, and local partners will be consulted on all projects. 
What will it invest in?  
It is expected to allocate funding across up to four priorities – reflecting the primary focus of the ERDF Programme, as well as ongoing need, demand and deliverability: 

  • exploiting ideas and embedding technology and innovation in businesses (Priority Axis 1), 
  • promoting entrepreneurship and helping entrepreneurs to start businesses including community enterprise (Priority Axis 3a),  
  • helping existing businesses to develop and grow, improving resilience and productivity through new technology and ways of working, including support to enhance digital capability of SMEs (Priority Axis 3c, 3d), 
  • helping places and businesses respond to the Clean Growth challenge (Priority Axis 4a, 4c, 4e, 4f) 
  • local green and blue infrastructure, including green infrastructure designed to improve flood resilience (Priority Axis 6). 

The final scope of the calls will depend on the amount of unused ERDF that is available, for each category of region. This will be determined by the progress of current applications in response to the last ERDF call as well as currency fluctuations. A further update will confirm the final position early in 2020.  
What type of projects will be  supported?  
The fund will enable government and stakeholders to invest in fresh approaches that deliver Operational Programme objectives.  Working in partnership with local and national partners, this funding round complements existing investments across England and delivers on the local growth priorities set out in local plans.  Priority will be given to projects that: 
1. Work across Local Enterprise Partnership and Mayoral Combined Authority areas, growth corridors, and pan-regional partnerships to link places, businesses and people with common economic or sectoral themes – to meet shared opportunities or challenges through larger scale, strategic projects.      

This recognises the role of local economic planning and collaboration across wider geographies such as across the Northern Powerhouse or Midlands Engine, in maximising economic impact by unlocking growth and productivity potential.  Equally, collaboration between places across England with similar sectoral or thematic needs can yield scale efficiencies, optimise the agglomeration effect of investment and spread best practices across England as a whole.  
2. Integrate activity across multiple Industrial Strategy foundations, including Grand Challenges
Integrated activity that sits across the Industrial Strategy foundations – ideas, business environment and infrastructure, and the grand challenges including clean growth – is well placed to deliver real impact.  For example: bringing together innovation diffusion with business space; aligning business support to a new infrastructure development or developing clean growth ideas - and demonstrating them in businesses or homes - enhances value for money and creates a more attractive growth offer.   
3. Innovate, either in what is funded or how it is delivered
This recognises the new challenges or opportunities that people, businesses or communities face.  Whether linked to the grand challenges, a local Industrial Strategy, as a response to Brexit or to evidence of what works, there is an opportunity to test new ways of delivering local growth support and fresh ways of packaging support to meet new needs.  This can help inform local growth delivery over the longer term. 
4. Demonstrate strong links and complementarity with domestic growth initiatives 
ERDF has a strong record of co-funding activity alongside other public funding, such as the Local Growth Fund, Growth Hub funding, the Department for International Trade and support from UK Research and Innovation’s Catapult programme.  

This summer, the Government also announced a £3.6 billion Towns Fund, targeted at places with a strong economic heritage but that have not always benefited from recent economic growth.  Where practical, ERDF can work in concert with other public funding – either extending the reach or depth of support, or funding complementary activity. 
5. Deliver new community focused initiatives, particularly larger programmes of activity across geographies focused on starting and growing new businesses in the most deprived places or working with communities of interest.

This builds on ERDF experience of delivering community led local development in a number of places across England and recognises that specific communities of place or interest face additional challenges in participating in the economy and realising their potential.  MHCLG are interested in working with national bodies to facilitate support for places and groups to deliver community enterprise activity, where possible in new and innovative ways, drawing on funding and support from across the economy.  This can play an important role in ensuring that economic performance is levelled up between communities. 
What happens next? 
The details of the overall call values, allocations by category of region and specific activities will be published in calls early next year.  
In the meantime, partners and potential applicants are encouraged to develop new project ideas that deliver against the priorities and type of projects that MHCLG  are looking to support.   

Article uploaded 6/11/19

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