FOREWORD—What this
report is about
The present policies to tackle regional disparities
in Europe are rooted in the creation of the Social Fund in 1958.
In the intervening time expenditure on the policies has grown
to the extent that 36% of the EU budget in 2008—0.38% of
EU GNI—will be spent in this area. Although money is transferred
through Member State exchequers, entitlement is on the whole dependent
on the wealth of the regions: poorer regions in a richer Member
State may be eligible for assistance.
The European Social Fund is still in place, and has
been joined by the European Regional Development Fund and the
Cohesion Fund: the triumvirate of Funds is colloquially known
as the Structural Funds. The majority of this funding targets
the poorest third of European regions, but approximately one fifth
is distributed across the remaining regions with the aim of improving
their competitiveness.
With work now beginning to examine the priorities
for the European budget in the period after 2014, we have chosen
to examine the distribution, management and impact of the Funds.
We continue to support the underlying principle of intervention
in the market to counter the uneven distribution of the benefits
and costs of the single market, but wish to ensure that this support
is delivered in an efficient and effective manner.
We find that the Funds are effective and, in general,
fit for purpose. The evidence we received suggests that the size
of the funding distributed to the poorest regions under the Convergence
Objective is approximately correct. We also heard that the absorption
cap in the poorest countries operates at an appropriate level
to match the ability of regions to use the funds.
We consider in detail the distribution of funds to
richer regions and wealthier Member States under the Competitiveness
Objective. We find that objections about the cost of management
of the funds are overstated. While we recognise that many Member
States would lose funding as a result, we suggest that the future
of the Competitiveness Objective should be reviewed during the
forthcoming review of the EU budget. The funding and scope of
the Convergence Objective, which supports the poorest regions,
is appropriate and it should remain.
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