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EU Regional Policy:
Future Of Cohesion Policy
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Outline:
Current Use of EU Funds Development of EU Strategy Process and Timetable Initial Positions
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What is Regional Policy?
It is a vehicle for delivering regional aid Second biggest slice of EU Budget which
helps poorer regions catch up undergoing economic change of restructure
Eg: disparities across the EU Luxembourg 251% GDP per capita (%
EU27 average) – highest Bulgaria 33% GDP per capita (% EU27
average) – lowest
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GDP per capita (2006):
0
50
100
150
200
250
300
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The main Purposes of the EU regional Policy:
Is to reduce the gaps in development between the regions
Article 158, Lisbon Treaty states that the Community will aim to reduce ‘disparities between the levels of development of the various regions’
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Structure:
There are three main funds: ERDF (European Regional Development Fund): € 271
billion. It finances direct aid for investment in companies, infrastructure and financial instruments. It is allocated in regional level
ESF (European Social Fund): € 76 billion. It finances projects in the labour market that improve skills (human skills) and access to employment opportunities and social integration. Also allocated in regional level
Cohesion Fund: € 70 billion. It finances developments in transport network; projects related to the environment; and energy and transport projects with clear environmental benefits. It is allocated at the Member State level
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Allocation of Funds:COMMITMENT APPROPRIATIONS
BY HEADING
In billion of EUR, at 2004 prices
In %
1a. Competitiveness for growth and employment (research, innovation, competitiveness)
72.1 8,4%
1b. Cohesion for growth and employment (regional policy) 307.6 35,7%
2. Preservation and management of natural resources
(Common Agricultural Policy, rural development, environment)
371.2 43,1%
of which market-related expenditure (CAP) 293.1 34,0%
3. Citizenship, freedom, security and justice
(internal policies; public health, asylum, immigration)
10.3 1,2%
4. The EU as a global partner (humanitarian and development aid) 50.0 5,8%
5. Total administrative expenditure 50.3 5,8%
6. Compensations Bulgaria and Romania (after accession expected in 2007)
0.8 0,1%
Total commitments 862.4 100
In % of EU-27 GNI 1.045%
COMMITMENT APPROPRIATIONS
BY HEADING
In billion of EUR, at 2004 prices
In %
1a. Competitiveness for growth and employment (research, innovation, competitiveness)
72.1 8,4%
1b. Cohesion for growth and employment (regional policy) 307.6 35,7%
2. Preservation and management of natural resources
(Common Agricultural Policy, rural development, environment)
371.2 43,1%
of which market-related expenditure (CAP) 293.1 34,0%
3. Citizenship, freedom, security and justice
(internal policies; public health, asylum, immigration)
10.3 1,2%
4. The EU as a global partner (humanitarian and development aid) 50.0 5,8%
5. Total administrative expenditure 50.3 5,8%
6. Compensations Bulgaria and Romania (after accession expected in 2007)
0.8 0,1%
Total commitments 862.4 100
In % of EU-27 GNI 1.045%
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Allocation of Funds:
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Allocation of Funds:
EU regional Policy funding is mainly concentrated on least prosperous. E.g.. Regions with the GDP per head below 75% of EU average
Also Member States with GDP per head below 90% of average
<50
50 - 75
75 - 90
90 - 100
100 - 125
125
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Allocation of Funds:
Information societySocial infrastructureEnergy
TourismCultureInstitutional capacity
Adaptability of workers and firms
Social inclusion
Capacity building
Technical assistance
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Indicative Financial allocation (2007-2013):
Poland - € 67 284 million Czech Republic - € 26 692 million Germany - € 26 340 million France - € 14 319 million United Kingdom - € 10 613 million Luxembourg - € 65 million
Source: ec.europa.eu/regional_policy/policy/fonds/pdf/annexe-recto.pdf
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Results:
Cohesion Policy is claimed to have a positive contribution to growth, national convergence and reduction of interregional disparities, employment
New MS have experienced rapid growth often concentrated in the capital regions and major cities: GDP in three Baltic States doubled in the decade from 1995 to 2005
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Results:
Greece reduced the gap with the rest of EU27, moving from 74% of average GDP per head in 1995 to reach 88% in 2005
During the same Spain moved from 91% to 102% and Ireland reached 145% from 102%
*Source: European Union Regional Policy “Working for the regions: EU regional Policy 2007-2013”, January 2008
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Critiques:
Assuming current growth rates continue, it will still take more than 15 years before Poland, Bulgaria and Romania reach GDP per capita of 75% of the EU27 average
Lack of coherence in development strategies Poor coordination of developments and agencies High administrative costs Persistently high level of disparities
It is also argued that Cohesion Policy could be done by MS themselves
*Source: European Union Regional Policy “Working for the regions: EU regional Policy 2007-2013”, January 2008
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Development of EU Strategy:
The debate on the future of CP has entered a new phase
The main issues of the debates: Improving the way regional and local resources
from all territories are used, so that they contribute to the competitiveness of all Europe
Focusing the policy more on results Continue simplifying the process used to
implement the policy Focusing the policy towards the future and
helping regions deal with the future challenges
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Challenges:
Globalisation: rapid globalisation, competitive pressure
Population change, migration flow Global climate change Rising energy prices, energy
security Economic crisis: sustainability of
public finances
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Future Priorities: I General
Environment-increase direct spending: responses to climate change
Energy-increase direct spending: promote low-energy lifestyle
Competitiveness, research, knowledge-increase expenditure
External policies-more spending on defence and foreign policies
Agriculture-maintain CAP and EU policy reinforcing Pillar 2
Cohesion Policy-limit Structural Funds to Convergence and Territorial Cooperation objectives
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Future priorities: II EU 2020
Growth based on knowledge and innovation
An inclusive high employment society
Green growth: a competitive and sustainable economy
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Future priorities: III Barca Report Structure/spatial focus of the
policy: place based policy for reducing persistent social inclusion in specific places
Thematic focus, core priorities:
Innovation Climate change Managing migration Skills Demographic ageing Performance: flexible
spending, promoting learning process
Delivery: strengthening governance for the core priorities; addressing management and control
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Future Priorities: IV Hübner Report
Mission: ‘a strong development policy
which enables all EU citizens wherever they live, to reap the benefits and to mitigate the risks of the market unification’
o Goals: enhance competitiveness and employment at regional level
Concentration on core priorities
Coherence in delivery Simplier management and
control systems
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Future Priorities: V Regions 2020 Europe 2020 puts forward
3 priorities:1. Smart growth: developing
an economy based on knowledge and innovation
2. Sustainable growth: promoting a more efficient, greener and more competitive economy
3. Inclusive growth: fostering a high-employment economy delivering social and territorial cohesion
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Future Priorities: V Regions 2020 Main targets: 75% of the population aged
20-64 should be employed 3% of the EU’s GDP should
be invested in R&D The “20/20/20”
climate/energy targets should be met (increase 30% of emissions reductions if the conditions are right)
The share of early school leaver be under 10% and at least 40% of the younger generation should have a tertiary degree
20 million less people should be at risk of poverty
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Changes at National Level:
Old Member States: Germany: would lose all convergence coverage, except
Brandenburg-Nordost Greece: 3 regions (Ionia Nisia, Peloponnesus and Kriti)
would lose eligibility with coverage falling from 37% to 24% of the national population
Italy: 2 regions (Molise and Balisicata) would gain Convergence status, taking coverage from 29% to just over 30% of the national population
Spain: 3 regions (Andalusia, Castilla-La Mancha and Galicia) would lose eligibility; only Extremadura would retain it so that coverage would fall form 31% to 2.4% of population
UK: West Wales and the Valleys; Cornwall and Scilly Isles would lose eligibility, so that the UK would have no Convergence regions
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Changes at National Level:
Following regions also will lose Convergence status:
Czech Republic: Stredni Cechy Malta Poland: Mazowiecki (Warsaw region) Romania: Bucharest-Ilfov Slovenia: following the split into 2 NUTS 2 regions,
Zahodna Slovenia (Ljubljana region)
Convergence regions coverage would become more heavily concentrated in the new Member States
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Timetable:
July 2010: Budget review July 2010: Letter from REGI to Commission and
MS on the future of Cohesion Policy November 2010: Report in REGI on ‘Urban
dimension of Cohesion Policy’ November 2010: 5th Cohesion Report January 2011: Cohesion Forum Early 2011: Proposal for Financial perspective Spring 2011: Legal proposals, impact assessment 2012/13: Adoption of legislative package 2014: Entry in force
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Process:
Significant changes in implementation One of the important changes introduced by the Lisbon
Treaty, is that co-decision becomes the ‘ordinary legislative procedure
Based on the principle of parity and means that neither institutions (EU parliament of Council) may adopt legislation without the other’s assent
In accordance with Lisbon Treaty only the Commission may put forward legislative proposals
It must be consulted with the Committee of the Regions Strengthened role of the national Parliament in the
legislative process. The national Parliament will act as watchdogs agency of the principle of subsidiary at an early stage of the decision –making procedure
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Initial Positions: 1. What are the overall views about the future of the EU Regional Policy?
Representatives from Budapest, LGA, Poland, Dortmund and Brussels had positive views on current policy
However representative from Lille Metropole suggested that the programme needs an improvement
Representative from Malmo had a slight pessimism
Eurocities: ‘Need for the cohesion to remain a policy aimed at a balanced and sustainable development of the whole Union, within and between territories’
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Initial Positions:2. Will the new policy be very different from the current policy?
Representatives from Budapest, Malmo, LGA and Poland suggested that crisis and tight budget will affect the policy
Lille Metropole: there is needed better definition of level and implementation
Representative from Dortmund suggested that there might be changes on the city level
Netherlands: highlighted 2 possible ways of changes-slide change (innovation/financial changes); will completely change (“revolutionary changes”)
Representative from Brussels argued that mainstreaming may also change
However representative from LGA emphasised there will not be great change because of political structure of EU
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Initial Positions:3. What would be a better solution?
Malmo: cover everyone Lille Metropole: better geographical definition; more
consideration for practical issues; long-term objectives should become short and medium term objectives
Poland: encourage greater participation of local communities
Dortmund: innovation Brussels: keep policy on EU level CEMR: sustainable development; and to identify,
strengthen and further develop the potential of each territory
UK: ‘Structural and Cohesion Funds should not be used other than for reducing regional disparities’
Germany: Strategy must remain focused on main objectives
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Initial Positions:4. Poor vs. Rich regions:
Budapest: concentrate money only on poorest countries is a mistake (“not to reduce to the poorest regions”); allocate according to regions; but emphasize poorer regions
Poland, CEMR: emphasise poorer regions Malmo: if spend money only on poorer nations it will turn to aid
programme, and in that case richer regions will lose an interest in regional policy
LGA: significant proportion of the EU funds should go to the disadvantage countries
Dortmund: poorer regions may have difficulties in handling more money. Therefore it should be equally distributed
Dortmund, Brussels: richer regions also need money as there are disparities within richer regions as well
Netherlands, Brussels: bigger amount of money should go to new Member States
UK: ‘Funding should be concentrated in the poorest regions. The richest 13 Member States should not receive any regional funds. Richer MS should remain responsible for the majority of their own regional funding’
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Initial Positions:5. Will there be problems in reaching agreement?
Almost all representatives agreed that there will be an agreement
But they also emphasised that there is huge divide in opinions, more than it was before
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Initial Positions:6. At what level of geography should the new programmes be designed and managed?
CEMR: more responsibility should be allocated to local and regional authorities. MS should be obliged to involve the local and regional level
Brussels: bigger lines should be drawn by the EU (EU level), but more autonomy should be given to the regions to decide how to allocate money (regional level)
Lille Metropole, Netherlands: flexible geography Dortmund: no change should be done, remain EU level LGA: sub-regional level Budapest: functional regions level Eurocities: ‘Functional urban area is the most
appropriate level to take action on numerous issues like transport or waste management’
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Initial Positions:7. What indicators should be used to allocate funding?
Budapest, LGA: GDP per capita Budapest, Dortmund: employment Representatives from Malmo, Lille
Metropole, Dortmund, Brussels argued that GDP per capita is not a good indicator
LGA also suggested demographic and climate change as possible indicators
UK: ‘The use of other indicators to pick up economic changes at local level (unemployment, health disparities, social inclusion) would be desirable’
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Initial Positions:7. What indicators should be used to allocate funding?
Representative from Netherlands suggested 3 levels of indicators:
1. On EU level: GDP2. On country level: climate change,
poverty, unemployment (depend on country’s own strategy)
3. Regional level: level of poverty on street level
*He also suggested that there should be given more autonomy for MS to decide which indicators to use
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Initial Positions:7. What indicators should be used to allocate funding?
CEMR: supports a wider set of criteria for the orientation and assessment of Cohesion Policy to complement the traditional GDP-based indicators:
a. Socio economic developmentb. Socio-cultural criteriac. Socio-demographic factorsd. Socio- environmental criteriae. Access to services f. Social inclusion
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Initial Positions:7. What indicators should be used to allocate funding?
Brussels: emphasised social indicator
However representative from Lille Metropole, Malmo and Dortmund believe that no changes will be done to current indicator
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Initial Positions:8. What should be the role of the cities?
Brussels: Cities should be heard Poland, Lille Metropole: urban dimension is
important Netherlands: problems must be dealt on urban level LGA: it should be up to cities how they manage their
programme Budapest: leadership of the cities is a solution for
the strengthen of regions Eurocities:’Cohesion Policy should include
mandatory urban priorities: principal cities in a region should be involved in setting those and in determining the appropriate scales of intervention. Cities should have the opportunity to manage urban measures directly and receive delegated funding’
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Conclusion: what questions will need answering in order to reach an agreement on the future of Cohesion Policy?
Which priorities to concentrate on? How to balance local, regional and
national priorities with EU priorities? How to balance connection between
richer and poorer regions? Financial management-maintaining a
stable, EU-wide policy? What should be done in order to make
achievements even more visible? To be sure that the policy is effective
