Select Committee on European Scrutiny First Report



Special Report No.1/2001 of the Court of Auditors concerning the Community Initiative — URBAN.

Legal base:
Document originated: 23 March 2001
Forwarded to the Council: 23 March 2001
Deposited in Parliament: 18 April 2001
Department: Trade and Industry
Basis of consideration: EM of 3 May 2001
Previous Committee Report: None
To be discussed in Council: No date known
Committee's assessment: Politically important
Committee's decision: Cleared


41.1  During the 1994­1999 programming period, the Commission operated 13 Community Initiatives, which were designed to provide more focussed assistance than that provided under the six Objectives for regions and groups in society most in need of assistance. Community Initiative programmes are prepared by the Member States on the basis of Guidelines drawn up by the European Commission.

41.2  URBAN, one of the 13 Community Initiatives, was aimed at increasing the living standards of people in deprived urban areas. Under URBAN, part­finance is given to a limited number of projects in geographically identifiable areas or administrative units which are situated in conurbations with more than 100,000 inhabitants or medium­sized towns, are preferably in regions whose economic development is lagging behind the EU average and are suffering from high rates of unemployment, a decaying urban fabric, poor housing and a lack of social facilities. Exceptionally, smaller towns suffering from overall economic decline could be included among the areas eligible under URBAN.

41.3  The total budget for URBAN during 1994-99 amounted to 897 million euros (£564 million), with the UK's share being 125 million euros (£78.6 million), or 14%.[64] Funding for URBAN was drawn from the both the European Regional Development Fund (ERDF) and the European Social Fund (ESF). Funds were allocated between the various Objective regions and other areas within Member States, with the majority of funding being allocated to the Objective 1 and 6 regions, and Objective 2 regions having priority over all other areas. Overall, 118 urban areas in the 12 Member States received funding under URBAN during 1994-99, of which 34 areas had fewer than 10,000 inhabitants, while 17 had more than 50,000.

41.4  URBAN is one of only four Community Initiatives to have been renewed for the new programming period (2000-06). The others are: INTERREG — cross­border, trans­national and inter­regional co­operation; EQUAL — trans­national co­operation to combat all forms of discrimination and inequalities in the labour market; and LEADER — rural development.[65]

The document

41.5  The document is a special report by the Court of Auditors on URBAN (1994-1999). The Court carried out audits at the Commission and in nine Member States (Italy, Spain, France, Greece, the UK, Germany, Ireland, the Netherlands and Portugal). The programmes for these nine Member States account for more than 90% of URBAN expenditure.

41.6  The report describes the allocation of resources, selection of eligible areas, programming, management and monitoring structures and implementation of the programmes. It concludes with a number of recommendations. The report also contains the Commission's response to the Court of Auditors' comments.

41.7  Summarising, the report says:

  • the Commission's guidelines for URBAN set numerous ambitious targets, which were vague;

  • programmes lacked specific objectives, resulting in a dissipation of effort and difficulty in assessing the impact of the programmes and the initiative as a whole;

  • precise objectives must be set for the period 2000 - 2006 in order to perform proper ex-ante appraisal and monitoring so as to influence the design and implementation;

  • procedures for determining eligible URBAN areas were not clear, resulting in a questionable selection of areas with many more areas being supported than envisaged;

  • Member States in future will be responsible for identifying areas and allocating funds according to a precise criteria in line with national rules for allocating public subsidies;

  • the allocation of community funds among Member States, regions, cities and URBAN areas was delayed by the superficial, or even non-existent, ex-ante appraisals of the programmes, with the effect that operations were concentrated at the end of the period;

  • the process of allocating resources in future should take place at the earliest possible stage, in order to avoid too much uncertainty about the financial resources for which the various operations may qualify;

  • similar or identical projects were supported in different URBAN areas experiencing different problems (high unemployment, heavy traffic, run-down historic centres, crime, drug abuse, prostitution, low-quality housing etc.), resulting in a scattergun approach;

  • projects were financed from both ERDF and ESF, which was extremely difficult to manage, whereas in future projects will be financed exclusively by the ERDF and better tailored to the main problems of the areas concerned;

  • the lack of reliable, up-to-date information systems at the Commission meant that it was impossible to access tangible information on the operations that are co-financed by the Structural Funds;

  • in future, as Structural Funds make more effort to support urban areas, there will be less need for special instruments that support cities;

  • there was weak monitoring of the assistance given under URBAN and very little exchange of knowhow and spreading of good practice; and

  • the Commission should consider how it can foster the spread of good practice in the urban environment, without confining itself to operations that are co-financed by URBAN.

41.8  The Court's general findings on URBAN are:

    "similar to those already expressed in previous inquiries on Structural Funds measures, and the Community Initiatives in particular. The new regulations and the start of the 2000-2006 programming period represent a fresh opportunity for the Commission and the Member States to introduce tangible initiatives rapidly, with the aim of simplifying and improving the programming, management, monitoring and evaluation of structural actions."

     The Commission's response

41.9  The Commission acknowledges that there were a number of problems with the initiative, but that the initiative had benefits such as supporting the creation of neighbourhood partnership, which involved local residents, and producing flagship projects in deprived areas to instill a sense of hope and help revive the local economy.

41.10  As regards identifying objectives more clearly, the Commission says that under URBAN II (2000-06), steps have been taken to improve effectiveness, such as the use of a standard set of funding priorities and a limited number of standard indicators.

41.11  The Commission says that the selection procedures has been improved for URBAN II in order to avoid a repeat of the delays experienced with URBAN I.

41.12  As regards the criticism that similar or identical projects have been supported in URBAN areas experiencing different problems, the Commission says that such areas generally all have broadly similar socio-economic features: economic decline, deterioration in transport networks and the environment, insecurity for local residents, etc. The Commission adds:

    "The principal advantage of the URBAN initiative is its integrated approach, which gives priority to a multisectoral strategy, which, rather than addressing symptoms, tackles the root causes of URBAN decay."

41.13  The Commission says that URBAN II will be managed more simply than URBAN I. For example, objectives will be stated more clearly, finance will be provided from a single fund, the ERDF, and responsibility for scrutinising and managing all the new programmes will be centralised in a single DG REGIO department. In addition, local authorities that have gained experience will be able to use their experience to become more active in implementing a whole range of structural fund programmes. The Commission says:

    "In the light of the above comments, the Commission believes that the conditions have been created for URBAN II to fully realise its potential to add value while at the same time being more effective and simpler.

    "The Commission shares the view of the Court regarding the goals of simplifying and improving management, monitoring and evaluation that are set out in the new Regulations for the 2000-06 period. It also agrees with the Court that the new programming period gives us the ideal opportunity to introduce such much-needed measures."


41.14  The Court of Auditors special report identifies a number of problems with the URBAN I initiative. The changes announced by the Commission for URBAN II should go some way towards improving the effectiveness of the initiative, which is to be welcomed. We now clear this document.

64   The figures are in 1999 values and are those used in the Court of Auditors report.  Back

65   For 1994-99, the total budget for the 13 initiatives amounted to 13.45 billion ECU, or 9% of the total financial allocation for the Structural Funds (1994-1999). See .

For 2000-06, The total budget across the EU for the four Initiatives for the period 2000 to 2006 is 10.4 billion euros (£6.5 billion), or 5.35% of the total allocation for the Structural Funds for the period. See European Commission Regional Policy and Structural Funds in the United Kingdom (2000­2006), 18 May 2000. Back

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