Select Committee on European Legislation First Report


THE COHESION FUND

24.   We consider that the following raises questions of political importance, but make no recommendation for its further consideration:--

DEPARTMENT OF TRADE AND INDUSTRY

(17500) 9910/96 COM(96)388	Commission's Annual Report on the Cohesion Fund for 1995.
Legal base:	Article 130d is relevant.

Background

24.1  This is a report on the Cohesion Fund for the year 1995. The fund exists to provide Community financial assistance to environment and transport infrastructure projects in the four poorest Members of the Community (Spain, Portugal, Greece and Ireland). This is the first full Annual Report of the operations carried out under the Fund since it was given a definitive legal base. Although cohesion operations have been carried out since April 1993, their legal base was a temporary cohesion financial instrument which was set up pending the ratification of the Treaty on European Union.

The 1995 Report

24.2  In the preface to its Report the Commission says that experience has been very satisfactory in terms of implementation of both the budget and projects on the ground. It says that efficient and adequate procedures have now been put in place in order to assure the preparation, implementation and monitoring of projects, and to help clarify and resolve any problems which occur.

24.3  The Commission says that it achieved its target of allocating finance to environment projects and transport infrastructure projects on a 50/50 basis. The report also stresses the importance which the Commission places on "conditionality", the principle that the beneficiary Member States should meet part of the cost of the projects. Total commitments for the Cohesion Fund in 1995 totalled 2,151.6 million ECU with a further 0.3 million ECU allocated to the Commission's anti-fraud unit. The sterling equivalent is £1.76 billion.

24.4  After a general description of the operation of the fund during 1995, the bulk of the remaining 500 pages is devoted to detailed descriptions of the individual projects supported by the fund.

The Government's views

24.5  In an Explanatory Memorandum dated 17 October, the Minister for Industry at the Department of Trade and Industry (Mr Knight) says that the Report has no direct policy implications for the United Kingdom. He continues:

"Many of the policy developments in 1995 are welcome. The improved understanding and application of public procurement rules will assist UK companies seeking to participate as suppliers and contractors, particularly in the larger projects. Improved economic analysis, particularly of transport projects, provides some reassurance that the projects being undertaken are economically worthwhile, although more work needs to be undertaken on developing similar methods for analysing environmental projects."

Conclusions

24.6  We have concluded that this report raises matters of political importance if only because of the large sums of money consumed by the Cohesion Fund. Having said that, although the report is an interesting reflection of the operation of the Fund during 1995, it does not raise the kind of issues which would justify a debate, and we clear the document

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Prepared 12th November 1996