4 The European Social Fund ~
| (35269)
13121/13
COM(13) 560
| Draft Regulation of the European Parliament and of the Council amending Council Regulation (EC) No 1083/2006 as regards the financial allocation for certain Member States from the European Social Fund
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| Legal base | Article 177 TFEU; co-decision; QMV
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| Document originated | 25 July 2013
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| Deposited in Parliament | 27 August 2013
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| Department | Business, Innovation and Skills
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| Basis of consideration | EM of 9 September 2013
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| Previous Committee Report | None, but HC 83-xiii (2013-14), chapter 20 (4 September 2013) is relevant
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| Discussion in Council | 30 September 2013
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| Committee's assessment | Politically important
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| Committee's decision | Not cleared; further information requested
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Background
4.1 At its meeting on 27/28 June, the European Council agreed
Conclusions which set out a number of concrete measures to tackle
youth unemployment and to "mobilise all available instruments
in support of youth employment."[15]
The measures include €6 billion of funding in 2014 and 2015
from the Youth Employment Initiative for regions with levels of
youth unemployment exceeding 25%, and the use of the European
Social Fund (ESF) to support the creation of new jobs for young
workers.
4.2 In July, the Commission put forward its seventh
draft amending budget for 2013, followed in August by a draft
Decision on the mobilisation of the Flexibility Instrument.[16]
This Instrument allows the financing of clearly identified expenditure
which could not be financed within the limits of the ceilings
available for one or more Headings of the Multiannual Financial
Framework (MFF).
4.3 The draft amending budget proposed an increase
of €150 million (£131 million) in commitment appropriations
in Heading 1b of the current MFF covering the period 2007-13.
This increase was intended to allow for additional commitments
to the 2013 ESF allocations for France, Italy and Spain in recognition
of "the special effort needed to address the specific situations
of unemployment, in particular youth unemployment, and of poverty
and social exclusion in these Member States."
4.4 In presenting the proposal the Commission indicated
that:
- it has "the aim of addressing
certain issues resulting from the final outcome of the negotiations
of the MFF for the years 2014-2020, affecting France, Italy and
Spain";
- the June European Council "considered that
a budgetary solution should be given to that matter"; and
- the most appropriate way to assist the three
Member States is by increasing the ESF.
4.5 The Commission proposed that the increase in
commitment appropriations would be covered by the margin under
the ceiling of Heading 1b, that is €16 million (£14
million), and by mobilisation of the Flexibility Instrument for
€134 million (£117 million). Our Thirteenth Report
of 4 September 2013 provides a more detailed overview.
4.6 The Financial Secretary to the Treasury (Greg
Clark) told us that the Government supported the content of the
Commission's proposals, as part of a wider commitment to tackle
youth unemployment, adding that the proposed increase in ESF commitment
appropriations in 2013 for France, Spain and Italy was agreed
unanimously as part of the June European Council deal. He noted
that France, Spain and Italy had the highest youth unemployment
rates of all Member States and the extra commitments could be
used to complement their Youth Employment Initiative funds.
4.7 Turning to the financial implications of the
proposal the Minister told us that:
- in accordance with the payment
rules of the Structural Funds, all payment applications for a
programme were assigned to the earliest open commitments and that
no additional payments would arise in 2013 for these additional
commitments, which would pay out in future years;
- payment appropriations in 2013 would therefore
stay unchanged;
- the commitments increase would still leave a
margin of €1.8 billion (£1.6 billion) in overall 2013
commitment appropriations;
- since the commitments would turn into payments
gradually, the payments flowing out of these commitments would
likely be spread over a long period;
- the UK's contributions to the payments flowing
out of these commitments would be determined by its financing
share in those years;
- whilst the lack of information on the annual
payment profile of the proposed additional commitments meant that
the Government was not yet able to calculate the exact cost to
the UK, the UK's post-abatement financing share was currently
estimated to be around 12.5% in 2013; and
- based on that financing share assumption, the
seventh draft amending budget for 2013 would cost the UK less
than €19 million (£16.60 million), spread over a number
of years, if all the commitments were fully implemented.
4.8 Whilst acknowledging the importance attached
by the European Council to tackling youth unemployment, we sought
further information on two aspects of the Commission's proposals.
First, we asked the Minister to explain what the Commission meant
when it referred to "certain issues resulting from
the final outcome of the negotiations of the MFF for the years
2014-2020, affecting France, Italy and Spain." Second, we
asked what scope there was for transferring commitment appropriations
from elsewhere in the 2013 Budget, rather than having recourse
to the Flexibility Instrument.
The draft amending Regulation
4.9 The Commission has proposed a draft Regulation
which would amend the figures set out in the 2006 Regulation establishing
the framework and resources for EU Structural and Cohesion Funds
(including the ESF) for 2007-13 in order to reflect the outcome
agreed by the European Council in June. In its explanatory memorandum
accompanying the draft amending Regulation, the Commission reiterates
its earlier statement that:
"In the context of the negotiations of the new
Multiannual Financial Framework for 2014-20, certain issues stemming
from the final outcome of the negotiations should be addressed."
4.10 The Commission makes clear that the bulk of
the additional commitments — €100 million — would
be allocated to France, with €30 million for Italy and €20
million for Spain. As the commitment appropriations concern the
year 2013, it underlines the need for urgency in agreeing the
changes to the 2006 Regulation.
The Government's view
4.11 The Minister for Business and Enterprise (Mr
Michael Fallon) explains:
"In the context of the current economic crisis
and in recognition of the special effort needed to address the
specific situations of unemployment, especially youth unemployment,
and poverty and social exclusion in three Member States, France,
Spain and Italy, the European Council in June 2013 decided to
assist them by increasing their funding from the European Social
Fund (ESF) for 2013."[17]
4.12 He confirms that the draft amending Regulation
would make provision for additional commitments of €100 million,
€30 million and €20 million respectively for France,
Italy and Spain as part of their 2013 ESF allocations, adding:
"The compensation will be provided from the
2007-2013 budget covered by the margin under the expenditure ceiling
of budget Heading 1b and by the mobilisation of the Flexibility
Instrument."[18]
4.13 The Minister describes the Commission's proposal
as "a technical amendment" to the 2006 Regulation which
does not alter the scope of the ESF and implements what was agreed
unanimously by the European Council in June. He continues:
"France, Spain and Italy will be the highest
recipients of the youth employment initiative funding of all the
EU Member States and the extra commitments will be used to tackle
the problems of youth unemployment in advance of the Youth Employment
Imitative funding which will commence in 2014. The UK supports
the focus of this funding on tackling youth unemployment."
4.14 The financial implications of the draft Regulation
are described in exactly the same terms as in the Explanatory
Memorandum provided by the Financial Secretary to the Treasury
(Greg Clark) on the seventh draft amending budget for 2013. The
Council is expected to consider the proposal on 30 September.
Conclusion
4.15 We are unwilling to clear the draft amending
Regulation until the Treasury has responded to the two questions
we raised in our Thirteenth Report. First, we would like to hear
how this proposal relates to the negotiations on the EU's Multiannual
Financial Framework for 2014-20 and which issues stemming from
the outcome of those negotiations it is intended to address.
Second, we wish to ascertain what efforts have been made to transfer
commitment appropriations from elsewhere in the 2013 budget, rather
than having recourse to the Flexibility Instrument.
4.16 We note that the increase of €150 million
in commitment appropriations would only affect ESF allocations
for France, Spain and Italy and is intended to address youth unemployment,
poverty and social exclusion in these Member States. We ask
the Minister to explain why the European Council unanimously agreed
additional commitments for these three Member States, even though
Greece has the highest youth unemployment rate in the EU (62.9%
in May 2013), the rate in Portugal is comparable to that in Italy
(37.4% and 39.5% respectively in July 2013), and France is one
of a number of Member States with a rate exceeding 20%. Pending
a response to our questions, the draft Regulation remains under
scrutiny.
15 See http://www.consilium.europa.eu/uedocs/cms_Data/docs/pressdata/en/ec/137634.pdf
Back
16
See 12769/13 and 12770/13. Back
17
Para 1 of the Minister's Explanatory Memorandum. Back
18
Para 2 of the Minister's Explanatory Memorandum. Back
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