Explanatory Memorandum to COM(2011)614 - Specific provisions concerning the European Regional Development Fund and the Investment for growth and jobs goal - Main contents
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| dossier | COM(2011)614 - Specific provisions concerning the European Regional Development Fund and the Investment for growth and jobs goal. |
|---|---|
| source | COM(2011)614  |
| date | 06-10-2011 |
On 29 June 2011, the Commission adopted a proposal for the next multi-annual financial framework for the period 2014-2020: A Budget for Europe 2020 i. . In its proposal, the Commission decided that cohesion policy should remain an essential element of the next financial package and underlined its pivotal role in delivering the Europe 2020 strategy[2].
The Commission therefore proposed a number of important changes to the way cohesion policy is designed and implemented. Concentrating funding on a smaller number of priorities better linked to the Europe 2020 Strategy, focusing on results, monitoring progress towards agreed objectives, increasing the use of conditionalities and simplifying the delivery are among the major hallmarks of the proposal.
This Regulation sets out the provisions governing the European Regional Development Fund, and repealing Regulation (EC) No 1083/2006. It draws on the work undertaken since the publication of the Fourth Cohesion Report in May 2007 which outlined the main challenges facing regions in the next decades and launched the debate on the future cohesion policy. On 9 November 2010, the Commission adopted the Fifth Cohesion Report which provided an analysis of social and economic trends and outlined orientations for the future cohesion policy.
Cohesion policy is the main investment instrument for supporting the key priorities of the Union as enshrined in the Europe 2020 strategy. It does so by focusing on the countries and regions where needs are greater. One of the greatest successes of the EU has been its capacity to raise living standards for all its citizens. It does this not only by helping poorer Member States and regions to develop and grow but also through its role in the integration of the Single Market whose size delivers markets and economies of scale to all parts of the EU, rich and poor, big and small. The Commission's evaluation of past cohesion policy spending has shown many examples of added value and of growth- and job- creating investment that could not have happened without the support of the EU budget. However, the results also show the effects of dispersion and lack of prioritisation. At a time when public money is scarce and when growth enhancing investment is more needed than ever, the Commission has decided to propose important changes to cohesion policy.
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 common economic interest; telecommunication, energy and transport infrastructures; health, education and social infrastructures; and sustainable urban development.
Contents
The results of the public consultations of Fifth Progress Report on Economic and Social Cohesion, the EU Budget Review[3], the proposals for the multi-annual financial framework i, the Fifth Cohesion Report[5] and consultations following the adoption of the report have all been considered when making the proposals.
The public consultation on the Conclusions of the Fifth Cohesion Report was held between 12 November 2010 and 31 January 2011. A total of 444 contributions were received. Respondents included Member States, regional and local authorities, social partners, European interest organisations, non-governmental organisations, citizens and other stakeholders. The public consultation asked a series of questions about the future of cohesion policy. A summary of the results was published on 13 May 2011[6].
The results of the ex-post evaluations carried out on the 2000-2006 programmes, and a broad range of studies and expert advice, were used as input. Expert advice was also provided through the High Level Group reflecting on future Cohesion Policy, composed of experts from national administrations, with 10 meetings held between 2009 and 2011.
The results of the public consultation on the Fifth Cohesion report show that there is general agreement with the notion of concentration of funding. There is, however a concern about decisions on concentration not being taken at the right level. In particular, many contributions emphasise the need for flexibility and the need not to overlook territorial specificities. Moreover, several expressed concern that limiting priorities too much at EU level would not allow the flexibility necessary to define appropriate regional development strategies.
Options were assessed in particular in relation to the ERDF contribution to two public goods:
– contribution to employment, R&D and innovation through enterprise support;
– investing in basic infrastructure (e.g. transport, energy, environment, social and health infrastructure).
Other areas where the ERDF makes an important contribution to the provision of EU public goods were not addressed, as successive evaluations and academic research have not identified particular problems in these areas as regards the scope of intervention of the ERDF.
With respect to enterprise support it can be argued that such support, in particular in the form of grants, is most needed for small enterprises, for innovative activities, and in areas in industrial decline undergoing structural change. The case for investing in large enterprises, less innovative areas, and regions which are attractive to investors without support is much weaker. The case for funding infrastructure is strongest in less developed regions where public authorities do not have sufficient funds for investment, and where the investment costs cannot be recovered as the population is low income. The case for investing in basic infrastructure in more developed regions is much weaker.
The options examined included the status quo, changes to make funding more targeted, and an option which would be significantly more restrictive in scope compared with current funding options. The option of increased targeting was chosen, which increases the efficiency, effectiveness and EU added value of funding, but at the same time leaves regions sufficient flexibility regarding investment, and minimises the risk that activities requiring funding fall outside the scope of intervention.
European regional policy has an important role to play in mobilising local assets and focusing on the development of endogenous potential.
Article 174 of the Treaty on the Functioning of the European Union (TFEU) calls for action by the European Union to strengthen its economic, social and territorial cohesion and promote overall harmonious development by reducing disparities between the levels of development of regions and promoting development in least favoured regions.
The goal of economic, social and territorial cohesion is promoted through three EU funds. As stipulated in Article 176 of the TFEU, the aim of the ERDF is to promote the development and structural adjustment of lagging regions and of declining industrial regions.
Article 174 of the TFEU states that particular attention shall be paid to rural areas, areas affected by industrial transition, and regions which suffer from severe and permanent natural or demographic handicaps such as the northernmost regions with very low population density and island, cross-border and mountain regions.
Article 349 of the TFEU states that specific measures shall be adopted to take account of the structural social and economic situation of the outermost regions, which is compounded by certain specific features which severely restrain their development. The specific measures shall include conditions of access to the Structural Funds.
The timing of the review of EU funding to promote cohesion is linked to the proposal for a new Multiannual Financial Framework, as contained in the Commission Work Programme.
As the EU Budget Review has highlighted, the 'EU budget should be used to finance EU public goods, actions that Member States and regions cannot finance themselves, or where it can secure better results'.[7] The legal proposal will respect the principle of subsidiarity as the tasks of the ERDF are set out in the Treaty and the policy is implemented in accordance with the principle of shared management and respecting the institutional competencies of Member States and regions.
The legislative instrument, and the type of measure (i.e. funding) are both defined in the TFEU, which has provided the legal basis for the Structural Funds, and states that the tasks, priority objectives and the organisation of the Structural Funds shall be defined in regulations.
The Commission's proposal for a Multi-Annual Financial Framework foresees an amount of EUR 376 billion for economic, social and territorial cohesion for the period 2014-2020.
Proposed budget 2014-| EUR billion
Convergence regions Transition regions Competitiveness regions Territorial cooperation Cohesion Fund Extra allocation for outermost and sparsely populated regions| 162,6 39 53,1 11,7 68,7 0,926
Connecting Europe Facility for transport, energy and information and communication technologies (ICT)| 40 (with an additional EUR 10 billion ring fenced inside the Cohesion Fund)
*All figures in constant 2011 prices
The Commission's proposal has established, with the aim of enhancing the contribution of the funds in delivering on the headline targets of the Europe 2020 strategy, minimum shares for the European Social Fund (ESF) for each category of regions. The application of the shares result in a minimum overall share for the ESF of 25% of the budget allocated to cohesion policy, i.e. EUR 84 billion. This implies that a maximum of EUR 183,3 billion remains available for the ERDF for the period 2014-2020.
The proposed Regulation determines the scope of intervention of the ERDF, and also defines a negative list of activities which will not be eligible for support. It defines investment priorities for each of the thematic objectives.
Transition regions and more developed regions will be required to focus the largest part of their allocation (except for the ESF) on energy efficiency and renewable energy, competitiveness of SMEs, and innovation. Less developed regions will be able to devote their allocation to a wider range of objectives reflecting the broader range of development needs. The mechanism proposed provides that:
– at least 80% of resources are focused on energy efficiency and renewables, research and innovation and SME support in more developed and transition regions of which 20% for energy efficiency and renewables. Given the ongoing restructuring needs in those regions phasing out from the Convergence objective, the minimum percentage shall be reduced to 60%.
– at least 50% of resources are focused on energy efficiency and renewables, research and innovation and SME support in less developed regions of which 6% for energy efficiency and renewables.
The proposed Regulation provides for an increased focus on sustainable urban development. The increased focus is to be achieved through the earmarking of a minimum of 5% of ERDF resources for sustainable urban development, the establishment of an urban development platform to promote capacity building and exchange of experience, and the adoption of a list of cities where integrated actions for sustainable urban development will be implemented.
The proposed Regulation aims to contribute to an increased orientation on results of funding by defining common indicators related to physical outputs as well as results relating to the final objective of funding.
The proposed Regulation mentions the need to pay special attention in operational programmes to specific difficulties of regions with severe and permanent natural or demographic handicaps.
Finally, the proposed Regulation contains specific provisions for the use of the specific additional allocation for the outermost regions.