POLICY
The primary objective of EU cohesion policy is to reduce the significant economic, social and territorial disparities that still exist between Europe’s regions. Failure to act to reduce these disparities would undermine some of the cornerstones of the EU, including its single market and its currency, the euro.
Cohesion policy also has a key role to play in delivering the Europe 2020 objectives throughout the EU. Well-targeted cohesion spending can deliver real added-value, stimulating growth and creating jobs in Europe’s regions. In accordance with the conclusions of the 5th Cohesion Report7, the Commission proposes to strengthen the focus on results and EU added-value by tying cohesion policy more systematically to the Europe 2020 objectives.
In particular, the Commission is proposing important changes to the way cohesion policy is designed and implemented. Funding will be concentrated on a smaller number of priorities, progress towards agreed objectives will be monitored more closely and strict conditionalities will be established in partnership contracts with the Member States. This will allow EU cohesion policy to make the greatest possible contribution to economic, social and territorial cohesion and the creation of growth and jobs.
INSTRUMENTS
>A common strategic framework
The Commission is proposing to bring the European Regional Development Fund, the European Social Fund and the Cohesion Fund together under a Common Strategic Framework, which will also cover the European Agricultural Fund for Rural Development and the European Maritime and Fisheries Fund. This will ensure greater coherence between the sources of funding and a much sharper focus on Europe 2020.
>Increased concentration on Europe 2020
To increase the effectiveness of cohesion spending, funding in future will be targeted on a limited number of objectives linked to the priorities of Europe 2020.
Cohesion funding will continue to be concentrated on the less developed regions and Member States. However, in view of the difficulties experienced by Member States in absorbing structural funding and in raising the necessary co-financing, the cohesion allocation will be capped at 2.5% of GNI.
A new category of region – ‘transition regions’ – will be introduced to replace the current phasing-out and phasing-in system. This category will include all regions with a GDP per capita between 75% and 90% of the EU27 average, and more in particular:
•Regions currently eligible under the convergence objective but whose GDP per capita has grown to more than 75% of the EU27 average. As a safety net, these regions will keep two thirds of their current allocation; and
•Regions which – although currently not eligible under the convergence objective – have a GDP per capita between 75% and 90% of the EU27 average. The level of support will vary according to the level of GDP, so that regions with GDP close to 90% of the EU average will receive an aid intensity similar to that of the more developed regions.
Competitiveness regions with GDP above 90% of the EU average will continue to receive support from cohesion policy for a limited number of priorities.
Transition regions and competitiveness regions would be required to focus the entire allocation of cohesion funding (except for the ESF) primarily on energy efficiency and renewable energy; SME competitiveness and innovation. In these regions, investments in energy efficiency and renewable energy will be at least 20%. Convergence regions will be able to devote their allocation to a wider range of objectives reflecting their broader range of development needs.
Finally, territorial cooperation will continue to play its role in helping regions overcome the disadvantages of their location on internal or external borders, in contributing to an ambitious neighbourhood policy and addressing shared cross-border and transnational challenges.
The cohesion instruments will be used to pursue distinct but complementary objectives:
•European Regional Development Fund
The ERDF aims to strengthen economic and social cohesion in the European Union by correcting imbalances between its regions. The ERDF supports regional and local development by co-financing investments in R&D and innovation; climate change and environment; business support to SMEs; services of general economic interests; telecommunication, energy and transport infrastructures; health, education and social infrastructures; and sustainable urban development.
Contrary to the current period, all these types of investment will in future be able to be financed not only by grants but also by financial instruments (risk capital risk funds, local development funds, etc.).
•European Social Fund
The European Social Fund aims to strengthen economic and social cohesion by supporting employment promotion; investment in skills, education and life-long learning; social inclusion and the fight against poverty; and enhancing institutional capacity and efficient public administration.
Minimum shares for the European Social Fund will be established for each category of regions (25% for convergence regions; 40% for transition; and 52% for competiveness regions) and the scope of the European Social Fund will be extended to cover the cost of equipment linked to investments in social and human capital
•Cohesion Fund
The Cohesion Fund helps Member States whose GNI per inhabitant is less than 90% of the EU27 average in making investments in TEN-T transport networks and the environment. Part of the Cohesion Fund allocation (€10 billion) will be ring-fenced to finance core transport networks under the “Connecting Europe” facility (see also separate fiche). The Cohesion Fund can also support projects related to energy, as long as they clearly present a benefit to the environment, for example by promoting energy efficiency and the use of renewable energy.
IMPLEMENTATION
>Shared management
The support provided through cohesion policy will continue to be subject to shared management by the European Commission and the Member States (except for the Connecting Europe Facility which will be centrally managed), which will be required to provide co-financing. Countries receiving financial assistance in accordance of Article 136 or 143 TFEU will have the possibility of benefitting from a higher rate of co-financing.
>Partnership Contracts
Partnership Contracts between the Commission and each Member State will set out the commitments of partners at national and regional level and the Commission. They will be linked to the objectives of the Europe 2020 strategy and the National Reform Programmes. They will set out an integrated strategy for territorial development supported by all of the relevant EU structural funds and include objectives based on agreed indicators, strategic investments and a number of conditionalities. They will contain commitments to give yearly account of progress in the annual reports on cohesion policy and in other public reporting.
>Integrated programming
Member States will in the future be encouraged to use multi-fund programmes with common processes for preparation, negotiation, management and implementation, in particular where the need for improved coordination of human capital and infrastructure investments is greatest.
Where appropriate, a “lead fund” will be established, linked to the policy domain(s) of the programme. The lead fund’s interventions would be complemented by interventions from the other structural funds so to ensure coherent support for the different thematic objectives under cohesion policy.
>Conditionality
New conditionality provisions will be introduced to ensure that EU funding is focussed on results and creates strong incentives for Member States to ensure the effective delivery of Europe 2020 objectives and targets through Cohesion policy. And to ensure that the effectiveness of cohesion expenditure is not undermined by unsound macro-fiscal policies, conditionality linked to the new economic governance will complement the sector specific ex ante conditionalities set out in each contract.
Conditionality will take the form both of ‘ex ante’ conditions that must be in place before funds are disbursed and ‘ex post’ conditions that will make the release of additional funds contingent on the achievement of pre-specified results. To facilitate this, clear milestones and indicators will be specified and progress monitored rigorously through annual reporting. Lack of progress will give rise to the suspension or cancellation of funding,
>Performance reserve
In order to strengthen the focus on results and the achievement of the Europe 2020 objectives, 5% of the cohesion budget will be set aside and allocated, during a mid-term review, to the Member States and regions whose programmes have met their milestones in relation to the achievement of the programme’s objectives related to Europe 2020 targets and objectives. The milestones will be defined in accordance with the regulations for cohesion policy.
>Innovative financing
In addition to grant funding, it is proposed that cohesion support for enterprises and projects expected to generate substantial financial returns will be delivered primarily through innovative financial instruments. (See also separate fiche on innovative financial instruments)
PROPOSED BUDGET ALLOCATION FOR 2014-2020
All figures in constant 2011 prices
Total proposed budget 2014-2020 €376 bn
Of which
•Convergence regions €162.6 bn
•Transition regions €39 bn
•Competitiveness regions €53.1 bn
•Territorial cooperation €11.7 bn
•Cohesion fund €68.7 bn
•Extra allocation for outermost and sparsely populated regions €926 million
•Connecting Europe Facility for transport, energy and ICT €40 bn plus €10 bn ring fenced inside the Cohesion Fund
