25Funds to help Member States affected by natural disasters
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Committee’s assessment |
Politically important |
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Cleared from scrutiny (decision reported on 19/04/2017) |
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Document details |
Proposal for a Regulation amending Regulation (EU) No 1303/2013 as regards specific measures to provide additional assistance to Member States affected by natural disasters |
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Legal base |
Article 177 TFEU; Ordinary Legislative Procedure; QMV |
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Department |
Business, Energy and Industrial Strategy |
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Document Number |
(38330), 15058/16, COM(16) 778 |
Summary and Committee’s conclusions
25.1Recent earthquakes in Italy have had a devastating effect on the region, causing death, displacement and substantial physical and cultural damage. The Commission proposal would allow the European Regional Development Fund (ERDF) to support reconstruction operations and provide that such operations could be financed fully from the ERDF, without the need for national co-financing. Normally the ERDF co-finances projects alongside national funding, with the proportion of ERDF and national funding varying according to the wealth of a particular region.
25.2The UK and other Member States have asserted the importance of the principle of national co-financing. In the Committee’s scrutiny our predecessors have expressed sympathy with the Commission’s approach but agree that co-financing is an important principle for EU structural funding and there is a risk that this new proposal—however well intended—could start to erode the principle.
25.3According to the Minister for Small Business, Consumers and Corporate Responsibility (Margot James) a compromise was reached among Member States establishing an ERDF financing rate of up to 95%. There will be a 5% cap on the proportion of the national ERDF allocation that could be used for disaster recovery. The Government was content with the compromise, which retained the principle of co-financing. Our predecessors had released the proposal from scrutiny at our meeting of 19 April to allow the Government to give its agreement.
25.4Negotiations on this document have now concluded with an outcome aligned with the position taken by our predecessors. We have no outstanding queries.
Full details of the documents
Proposal for a Regulation amending Regulation (EU) No 1303/2013 as regards specific measures to provide additional assistance to Member States affected by natural disasters: (38330), 15058/16, COM(16) 778.
Background
25.5In order to provide additional assistance to Member States affected by natural disasters, the Commission proposed the introduction of a new option (“priority axis”) under the European Regional Development Fund with a co-financing rate of up to 100%. Further information was set out in our predecessors’ Report of 11 January 2017.
25.6The previous Committee was sympathetic to the Commission’s objective of supporting Member States affected by natural disasters. Equally, the Committee welcomed the efforts being made to reach a compromise consistent with the principle of co-financing. The Committee released the proposal from scrutiny at its meeting of 19 April, with a view to allowing the Government to engage constructively as the negotiations moved towards conclusion.
Minister’s letter of 22 June 2017
25.7The Minister sets out developments in the following terms:
“Since I submitted the Explanatory Memorandum, discussions have continued on this proposal in Council and a number of other Member States have raised similar concerns to the UK about retaining the principle of co-financing. The UK supported a position to allow Member States a 10% increase in co-financing rates for reconstruction projects following natural disasters. This would have resulted in 60–95% of project costs coming from EU funds, depending on the wealth of the regions affected. So this would have protected the principle of co-financing while creating a mechanism to provide additional support to Italy (along the lines of previous decisions that benefitted Greece and Cyprus during economic crises). Unfortunately, some Member States could not accept this compromise proposal.
“As we explained to the House of Commons EU Scrutiny Committee previously (see correspondence of March 2016), we had previously decided that, if pushed, we would prioritise being constructive participants and accept the Commission proposal in its original form (100% co-financing) rather than oppose it on a point of principle. In fact, following the rejection of the aforementioned compromise proposal we were able to reach a new compromise position with the Commission and other Member States, accepting a rate of up to 95% co-financing across the EU, but importantly retaining the principle of co-financing. We also agreed to a cap on overall spending on projects covered by this approach. The amount spent cannot exceed 5% of the total ERDF allocation in a Member State for the 2014–2020 programming period.
“A draft regulation to implement the new compromise has now been passed by the European Parliament and will go to Council for approval on 26 June.”
Previous Committee Reports
Thirty-ninth Report HC 71–xxxvii (2016–17), chapter 4 (19 April 2017); Thirty-fifth Report HC 71–xxxiii (2016–17), chapter 2 (15 March 2017); and Twenty-fifth Report HC 71–xxiii (2016–17), chapter 1 (11 January 2017).
1 December 2017