important notice
achievement of n+2 target for 2004

This notice is to advise the Partnership of the current state of play with regard to the performance of the Programme and the submission of ERDF grant claims.

Under the Structural Fund Regulations for the 2000 – 2006 programming period, the European Commission with the encouragement of the member states introduced a new financial discipline simply referred to as N+2. In effect what this means is that each Structural Fund Programme must formally declare a level of grant paid out by 31 December 2003 (and every year until end 2008), a level of expenditure equivalent to its first two years Structural Fund allocation minus the Commission advance (and on an incremental basis until end 2008).

In the case of the East of Scotland Objective 2 Programme the N+2 target figure for 2003 was successfully achieved. The next financial milestone for the Programme to achieve is the N+2 target figure for 2004 of 115.08824 MEURO, which for illustrative purposes equates to £76,798,832 at the June 2004 exchange rate.

At the time of writing, the level of ERDF grant paid to date in the Programme stands at £59,973,892, leaving a gap of over £16.8m to bridge over the next five months in order to meet the N+2 target for 2004.

Although the current level of programmed spend in 2004 (as detailed in approved project applications) seems to indicate that there is sufficient potential expenditure to bridge this £16.8m gap, it is essential that partner organisations do not become complacent in the implementation of approved projects.

In line with sound governance principles and to ensure as a partnership programme that all action undertaken is seen to be equitable and transparent, it is essential that all project sponsors accept their obligations to submit grant claims timeously.

As such, I urge you to ensure that where your organisation is a lead project sponsor, you continue to submit grant claims quarterly in line with the agreed ERDF Compliance Procedures and to advise the PME promptly where a project is not spending to schedule.

As regards any shortfall in achieving the N+2 target figure, you should be aware that the amount of any shortfall will be lost to the Programme for the duration of the programming period. Should this prove to be the case the consequences both financial and political will be extremely uncomfortable for all concerned.

Once again I would appeal to you to treat this matter seriously and should you require any further information or indeed advice please do not hesitate to contact me or Nigel Thomas, Assistant Chief Executive. It is possible that we are already speaking to key members of your staff in this regard but if not we stand ready to respond as a matter of priority.

Thanking you in anticipation for your co-operation in this matter.

GORDON McLAREN
CHIEF EXECUTIVE

09 June 2004

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