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 to request your assistance in ensuring that all ERDF grant claims from your organisation are submitted.

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 crucial 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 £78,467,162 at the October 2004 exchange rate. At the time of writing, the level of ERDF grant paid to date in the Programme stands at £69,963,480, leaving a gap of £8.5m to bridge over the next five weeks 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 £8.5m 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 and by the agreed Programme deadlines. As such, I write to remind you that all sponsors are required by 05 November 2004 to have claimed all expenditure incurred on your projects up to at least 30 September 2004. For your information, I have attached a spreadsheet detailing the current claims performance for all live projects being delivered by your organisation with programmed spend in 2004. This represents the position as at 14 October 2004.

This crucial November deadline has been well communicated to finance officers responsible for preparing grant claims for over three months now by ESEP staff and both the Programme Monitoring and Management Committees have been kept informed. In addition to this minimum requirement, a number of sponsors have also indicated that they are prepared to submit a further claim in November to include all expenditure incurred in October. This willingness to assist is much appreciated and I would ask you to consider whether it is feasible for your own organisation. Please also note that in addition to helping to meet the N+2 target, the receipt of updated grant claims will enable the Programme Executive to have a clearer view regarding the state of project implementation and will enable any grant under-spends to be identified and recycled back into the Programme. As the Programme moves towards closure, this will become the only way that new projects will be able to be funded in certain operational measures.

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. For example, a list of sponsors failing to comply with the November deadline and where there is no clear justification will be prepared for the Programme Management Committee meeting on 10 December 2004 with a view to de-commitment of expenditure and withdrawal of ERDF grant offers.

Once again I would appeal to you to treat this matter with the utmost urgency and should you require any further information or indeed advice please do not hesitate to contact Nigel Thomas, Assistant Chief Executive.

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

GORDON McLAREN
CHIEF EXECUTIVE

15 October 2004

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