Various Documents considered by the Committee - European Scrutiny Committee Contents

6 The future of cohesion policy



COM(10) 642

+ ADDs 1-14

Commission Communication: Conclusions of the fifth report on economic, social and territorial cohesion: the future of cohesion policy

Commission staff working documents: Conclusions of the fifth report on economic, social and territorial cohesion

Legal base
Document originated9 November 2010
Deposited in Parliament17 November 2010
DepartmentBusiness, Innovation and Skills
Basis of considerationMinister's letter of 15 February 2011
Previous Committee ReportHC 428-xi (2010-11), chapter 6 (15 December 2010)
Committee's assessmentPolitically important
Committee's decisionCleared

Background and previous scrutiny

6.1 The Commission Communication is a consultation document which sets out the challenges facing EU cohesion policy in light of a deep economic crisis, rising unemployment and poverty, and the need to switch to a low-carbon economy. It seeks views on a number of ideas for reform proposed by the Commission which, if agreed, would take effect in the next financial period (2014-20). The reforms are intended to concentrate resources on Europe 2020 objectives and targets (more jobs and sustainable and inclusive growth), strengthen governance and focus on delivering better results.

6.2 When we considered the document on 15 December 2010, we noted that the Government accepted the broad thrust of the Commission's reform ideas, while expressing a principled objection to the introduction of any new, binding economic conditionality affecting Member States' entitlement to Structural and Cohesion Funds ("the EU Funds"). As the Government said that it intended to produce a formal response to the Commission's consultation, we asked the Minister to provide us with a copy and held the Communication under scrutiny.

The Minister's letter of 15 February 2011

6.3 The Minister of State for Business and Enterprise (Mr Mark Prisk) encloses a copy of the Government's response to the Commission's consultation. He says that the Government would like to see receipts from the EU Funds during the next programming period (2014-20) falling significantly in richer regions and Member States, and that the ultimate goal should be the removal of all cohesion funding for wealthier Member States so that EU Funds can be used to promote economic convergence in poorer EU regions. He also expresses the Government's commitment to a smaller EU budget, in line with Member States' efforts to reduce public spending, and envisages an "affordable" EU Funds budget which must be "fair and realistic, focussing on development for the poorest."[32]

6.4 The following paragraphs highlight the main points made by the Government in response to the themes identified in the Commission's Communication.

Enhancing the European added value of cohesion policy

6.5 The Government says that Member States need flexibility to decide how best to use EU Funds to address "Europe 2020 bottlenecks to growth" and that there should not be any "rigid, top-down targets." It suggests focussing EU cohesion expenditure on infrastructure investment, support for SMEs, innovation, enhancing skills to improve employability, and localised regeneration and community economic development, but also highlights the importance of using cohesion policy to support the move to a low-carbon economy.


6.6 The Government believes that entitlement to EU Funds should be based on an objective assessment of need and opposes the introduction of any new "external" conditionality that would, for example, reflect the effectiveness of Member States' institutions and macroeconomic policies and funding, as it says that this would be difficult for others to measure and should be tackled by other means. The Government would support better dissemination of best practice to ensure that the EU Funds are used effectively and deliver concrete results, as well as a much stronger emphasis on evaluation to measure the impact of EU investment. Any reform of the EU Funds should seek to reduce bureaucracy and administrative burdens while also ensuring transparency and accountability to EU taxpayers. The Government does not endorse the Commission's proposal for a "performance reserve" which could be used to channel additional funding to regions and Member States whose cohesion programmes have contributed most to Europe 2020 targets, because it fears that the wealthiest regions and Member States with greatest capacity would benefit most.

Strengthening governance

6.7 The Government believes that Member States should have greater freedom and flexibility to design their national and regional architecture for delivery of the EU Funds and that there should be more synergy and coordination between EU Funds and Member States' own domestic investment programmes.

6.8 The Government supports the use of the EU Funds to encourage territorial cohesion through the development of cross-border cooperation, provided it is evidence-driven and demonstrates clear added value. The Government cites as an example the PEACE III Programme in Northern Ireland which helps to consolidate the region's institutions for devolved governance and to address the legacy of decades of conflict and division.

A streamlined and simpler delivery system

6.9 The Government says that the Commission's proposal to create a common strategic framework for the Structural and Cohesion Funds, the European Fisheries Fund and the European Agricultural Fund for Rural Development has the potential to strengthen the impact of EU policies and investment in the delivery of Europe 2020 goals. It believes that there is scope to rationalise different EU funding streams and to clarify the distinctive value and objectives of each funding instrument.

6.10 The Government emphasises the need to simplify the EU Funds so as to reduce the administrative burdens imposed on recipients and on national authorities. It says that audit and control should be "risk-based and proportionate" so that the costs of controls are in proportion to the benefits that they bring. The Government also believes that there should be a greater focus on outcomes and less on process, with effective evaluation and performance management built into the design of each cohesion programme.

The architecture of cohesion policy

6.11 The Government suggests that the EU Funds should be better targeted. For example, it says that the European Regional Development Fund should focus on "economic development bottlenecks" which impede growth; the European Social Fund should target support towards the most disadvantaged groups, according to labour market need, and seek to tackle skills gap; and the Cohesion Fund should continue to focus on those Member States whose GNI per capita is lower than 90% of the EU average and support investment in environmental and transport infrastructure projects which encourage their efforts to move to a lower carbon economy.

Other issues

6.12 The Government re-iterates its support for greater use to be made of loans from the European Investment Bank to maximise public investment and stimulate growth, and says that it would welcome the opportunity to work with the Commission to examine whether more private capital could be brought into projects involving the Structural and Cohesion Funds.

6.13 The Government emphasises that it would not support any reduction in levels of co-financing as it considers co-financing to be "a fundamental principle of cohesion policy, ensuring ownership and providing incentives to deliver effective programmes with sound financial management."[33]

6.14 The Minister tells us that the General Affairs Council on 21 February will discuss the Commission Communication and intends to adopt Council Conclusions.


6.15 The future of EU cohesion policy is important because Structural and Cohesion Funds currently account for more than one third of the EU's budget. Any proposals to reform EU cohesion policy ahead of the next financial period may well have important implications for the shape and size of the next EU budget settlement. We thank the Minister for providing us with a copy of the Government's formal response to the Commission consultation. It gives us a useful early indication of the approach likely to be taken by the Government when the Commission presents legislative proposals for a new framework for the Structural and Cohesion Funds later in the year and we are now content to release the Communication from scrutiny.

32   See page 1 of the covering letter accompanying the Government's consultation response.  Back

33   See page 3 of the covering letter accompanying the Government's consultation response. Back

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