6 The future of cohesion policy |
+ 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
|Document originated||9 November 2010
|Deposited in Parliament||17 November 2010
|Department||Business, Innovation and Skills
|Basis of consideration||Minister's letter of 15 February 2011
|Previous Committee Report||HC 428-xi (2010-11), chapter 6 (15 December 2010)
|Committee's assessment||Politically important
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."
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
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.
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.
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."
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
See page 3 of the covering letter accompanying the Government's
consultation response. Back