Explanatory Memorandum to COM(2022)109 - Amendment of Regulation (EU) No 1303/2013 and Regulation (EU) No 223/2014 as regards Cohesion’s Action for Refugees in Europe (CARE) - Main contents
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This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2022)109 - Amendment of Regulation (EU) No 1303/2013 and Regulation (EU) No 223/2014 as regards Cohesion’s Action for Refugees in ... |
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| source | COM(2022)109  |
| date | 08-03-2022 |
1. CONTEXT OF THE PROPOSAL
• Reasons for and objectives of the proposal
This proposal provides for exceptional and targeted changes to the overall 2014-2020 legal framework established for the European Structural and Investment Funds and for the Fund for the European Aid to the Most Deprived (FEAD) in response to, firstly, the invasion of Ukraine by the Russian Federation and the resultant impact on the European Union and several of its eastern regions in particular; and secondly, the extended impact of the COVID-19 pandemic on the EU as a whole.
Firstly, as a result of the unprovoked and unjustified military aggression by Russia, the EU, and several of its eastern regions in particular, are faced with some immediate migratory challenges, notably as regards flows of third country nationals. It is therefore important to clarify the range of support that can be provided to Member States and regions to enable them to address this extraordinary situation and to prevent their on-going work to build a resilient recovery from the COVID-19 pandemic being put at risk.
In this context, it is important to recall that Member States and regions are already able to support measures to address migration challenges under the European Regional Development Fund (‘ERDF’) and the European Social Fund (‘ESF’) including under the additional resources made available as Recovery Assistance for Cohesion and the Territories of Europe (‘REACT-EU’). Such support can include investments in infrastructure, equipment, products, access to services and operations in the areas of education, employment, social inclusion, health, administrative capacity, community-based and home-care services and anti-discrimination as well as support for reception systems complementing the support from the AMIF and other funding sources. It is also important to recall that the FEAD may be used to provide food and basic material assistance also to those affected by the military aggression by Russia including third country nationals.
While the additional REACT-EU resources already benefit from a number of implementation flexibilities, some of those flexibilities do not apply to the ERDF and ESF resources from the 2014-2020 multiannual financial framework. In addition, it is also appropriate to set out specific measures for the FEAD, in particular taking into account the urgent need to provide basic material assistance to those persons affected by the military aggression by Russia. Taking into account the urgency to address the migratory challenges as a result of the military aggression of Russia, it is therefore necessary to allow for retroactive eligibility to the start date of that aggression for concerned operations. Furthermore, flexibility in the support between ERDF and ESF should be increased for such operations so that available funding in programmes may be used quickly. Moreover, in order to ensure that the FEAD can be swiftly used to provide basic material assistance to affected persons, including third country nationals, it is appropriate to allow Member States to amend certain elements of programmes supported by the FEAD without requiring approval by the Commission.
Secondly, the duration of the COVID-19 pandemic has been longer than could have been expected in 2020. The direct and indirect impacts of the pandemic persist in all Member States, requiring prolonged public support for the recovery of the most impacted territorial areas and economic sectors. This has led to very high pressure on the budgets of Member States, thus requiring further exceptional measures to be applied in these circumstances.
The two packages of measures under the Coronavirus Response Investment Initiative (CRII) and CRII+ approved by Regulations (EU) 2020/460 and (EU) 2020/558 respectively in spring 2020 introduced a number of significant changes that enabled a more effective response and provided exceptional additional flexibility to respond to the unprecedented situation. Taking into account the specific risks faced by the most deprived due to the pandemic, the second package also included amendments to Regulation (EU) No 223/2014 (FEAD Regulation), through Regulation (EU) 2020/559, introducing specific measures of additional flexibility and liquidity for Member States to address the COVID-19 pandemic under the Fund for European Aid to the Most Deprived (FEAD).
Furthermore, substantial additional resources were made available from NextGeneration EU for cohesion policy, as REACT-EU, to provide assistance for fostering crisis repair in the context of the COVID-19 pandemic and its social consequences and for preparing a green, digital and resilient recovery of the economy. These additional resources can also be used by Member States to increase the allocation for programmes supported by the FEAD.
The introduced flexibilities and additional resources, including EUR 50 billion of fresh money under REACT-EU, and EUR 23 billion of retargeted funding under CRII and CRII+, have had a major positive impact. In particular, some EUR 8 billion has been re-allocated towards urgent investment in personal protective equipment, ventilators and ambulances. More than EUR 12 billion has been targeted at providing emergency grants and low-interest rate loans to small businesses, enabling them to stay afloat. Nevertheless, the duration of the pandemic and its effects on the EU economy, people, notably the most deprived, and society at large have exceeded initial expectations. In particular, the high pressure on the budgets of Member States has reduced the resources available to ensure the necessary national co-financing for the programmes concerned.
The emergence of new variants of the virus in the course of 2021, notably the Omicron variant in the later part of the year, and the accompanying widespread tightening of restrictions in the last quarter of 2021 further exacerbated the negative effects on Member States’ economies.
Moreover, Member States are facing additional pressure on their budgets as they take sizeable fiscal measures to address the recent spike in energy prices by mitigating the impact on the most vulnerable, on smaller businesses and on energy intensive industries. The economic impact of the invasion of Ukraine is also not yet clear and could have significant downside effects on the post-COVID-19 recovery of the economies of Member States.
Consequently, support from the Funds should be mobilised speedily to alleviate the burden on national budgets. It is therefore necessary, as a temporary and exceptional measure and without prejudice to the rules that should apply under regular circumstances, to extend to the ongoing accounting year 2021-2022 the temporary possibility of 100% co-financing from the EU budget for the implementation of cohesion policy programmes and programmes supported by the FEAD.
• Consistency with existing policy provisions in the policy area
The proposal is consistent with the overall legal framework established for the European Structural and Investment Funds and for the Fund for the European Aid to the Most Deprived and is limited to targeted and exceptional amendments of Regulation (EU) No 1303/2013 and Regulation (EU) No 223/2014. The proposal also complements the preceding amendments to these regulations under Regulations (EU) 2020/460, (EU) 2020/558, (EU) 2020/559, (EU) 2021/177 and (EU) 2020/2221 as well as all other measures aimed at addressing the current unprecedented situation.
• Consistency with other Union policies
The proposal is limited to targeted and exceptional amendments of Regulations (EU) No 1303/2013 and (EU) No 223/2014 and maintains consistency with other Union policies.
2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY
• Legal basis
The proposal is based on Articles 175(3) and 177 of the Treaty on the Functioning of the European Union.
It facilitates the use of cohesion policy and FEAD resources to support measures to address migratory challenges as a result of the military aggression by Russia and provides for the possibility of a co-financing rate of 100% for the ERDF, the ESF, the Cohesion Fund and the FEAD for the accounting year 2021-2022.
• Subsidiarity (for non-exclusive competence)
The proposal aims to facilitate the use of cohesion policy and FEAD resources by Member States and regions to support measures to address migratory challenges as a result of the military aggression by Russia and allow for a derogation from the normal co-financing rules currently applicable in order to allow for the necessary flexibility to mobilise existing investment resources to address the direct and indirect effects stemming from the unprecedented public health crisis in the context of the COVID-19 pandemic.
• Proportionality
The proposal is an exceptional and targeted change not going beyond what is necessary to achieve the objective of facilitating the use of cohesion policy and FEAD resources to support measures to address migratory challenges as a result of the military aggression by Russia and providing the possibility of 100% co-financing to mobilise investments in response to the widespread public health crises affecting the growth of regions and enterprises and the well-being of the general public and to avoid that the support to the most deprived is disrupted.
• Choice of the instrument
A Regulation is the appropriate instrument to facilitate the use of cohesion policy and FEAD resources to support measures to address migratory challenges as a result of the military aggression by Russia and to extend the possibility of 100% co-financing needed to address these unprecedented circumstances.
3. RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS
• Ex-post evaluations/fitness checks of existing legislation
• Stakeholder consultations
The proposal follows high level exchanges with other institutions and Member States. A public consultation is not required given that there is no need for an impact assessment.
• Collection and use of expertise
• Impact assessment
An impact assessment has been carried out to prepare the proposals for Regulations (EU) No 1303/2013 and (EU) No 223/2014. These current targeted changes to respond to critical situations do not require a separate impact assessment.
• Regulatory fitness and simplification
• Fundamental rights
4. BUDGETARY IMPLICATIONS
The proposal only concerns cohesion policy and FEAD programmes from the 2014-2020 period and does not modify existing budgetary commitments. It will facilitate an acceleration of programme implementation and is expected to result in a frontloading of payment appropriations to 2022 and 2023, balanced by a reduced payment need for later years.
The proposed modification does not require changes in the Multiannual Financial Framework annual ceilings for commitments and payments as per Annex I to Council Regulation (EU, Euratom) 2020/2093, and does not imply changes to the overall payment needs over the 2021-2027 period.
Based on the previous uptake of the 100% co-financing rate in the 2020-2021 accounting year, the level of payment applications submitted in the second half of 2021, and the latest Member State payment forecasts for 2022, the budgetary impact of the application of the 100% co-financing rate for the 2021-2022 accounting year is estimated to represent a frontloading of payment needs of EUR 9 billion to 2022 and EUR 1 billion to 2023, compensated by a corrresponding reduction of EUR 10 billion in 2024.
However, in order to be able to comply with the payment ceilings in years 2022 and 2023, it is proposed to cap the total additional payments resulting from the application of the 100% co-financing rate at EUR 5 billion in 2022 and EUR 1 billion in 2023. The additional amounts will only be paid after all the the payment applications are received for the accounting year 2021-2022. Where necessary, the additional payments resulting from the application of the 100% co-financing rate will be made on a pro rata basis to ensure equal treatment of all concerned programmes. Payments that cannot be made as a result of the application of these ceilings should be paid by the Commission at the earliest opportunity subject to the availability of funding, either with the acceptance of the accounts or through subsequent payments.
The Commission will carefully monitor the impact of the proposed modification on payment appropriations in 2022 and 2023, taking into account the overall implementation of the budget, revised Member State forecasts, as well as any possible emerging needs or priorities. Any possible impact from increased uncertainty linked to the security outlook will also be taken into account.
5. OTHER ELEMENTS
• Implementation plans and monitoring, evaluation and reporting arrangements
The implementation of the measures will be monitored and reported upon in the framework of the general reporting mechanisms established in Regulations (EU) No 1303/2013 and (EU) No 223/2014.
• Explanatory documents (for directives)
• Detailed explanation of the specific provisions of the proposal
It is proposed to amend Regulation (EU) No 1303/2013 and Regulation (EU) No 223/2014 in order to:
·ensure that Member States and regions may continue to benefit from a 100% EU co-financing rate for the accounting year 2021-2022 and this by way of notification to the Commission (amendment of Article 25a of Regulation (EU) No 1303/2013 and Article 20 of Regulation (EU) No 223/2014);
·introduce arrangements for the budgetary execution of additional payments resulting from the application of the 100% co-financing rate to take account of annual ceilings for payments (amendment of Article 25a of Regulation (EU) No 1303/2013);
·introduce additional flexibility between ERDF and ESF specifically for operations addressing the migratory challenges as a result of the military aggression by Russia and introduce simplified reporting arrangements on participants (amendment of Article 98 of Regulation (EU) No 1303/2013), with a retroactive start date of eligibility of support set at 24 February 2022 (amendment of Article 65(10) of Regulation (EU) No 1303/2013);
·introduce flexibility for Member States to amend programmes supported by the FEAD and this by way of notification to the Commission (amendment of Article 9 of Regulation (EU) No 223/2014) and also with a retroactive start date of eligibility of support set at 24 February 2022 (amendment to Article 22 of Regulation (EU) No 223/2014).