On 22 July, as the real impact of the financial crisis on the labour market was already being felt far and wide, the European Commission presented a second package of measures aimed at adapting the Structural Funds. The idea is to accelerate the flow of finance to beneficiaries. The message has not changed since the start of the crisis: implementation of cohesion programmes must not be delayed by the difficult environment. On the contrary, mobilisation of available funds – €347 billion for 2007-2013 – can help combat the crisis by assuring the continuity of investments in the ‘real economy’. The keywords are therefore flexibility and simplification.

This second package is probably the last the Commission will consider during the current programming period (2007-2013). To the tune of “it’s not a good idea to change the rules in the middle of the game,” Dirk Ahner, director-general in DG Regio, recently commented that “the limit of what can be done” had been reached. That obviously does not exclude further simplification measures for the next programming period.

The key feature of the proposal is the elimination, in 2009 and 2010, of the obligation of state co-financing of projects receiving support from the European Social Fund (ESF). This means that the countries may have their projects financed in full by the ESF, without putting up the national counterpart usually required for all projects aided by the Structural Funds. The idea is to keep budgetary problems faced by governments and regions from delaying investments in measures that can give a leg up to the labour market just when this is most needed.

TOO MUCH OR NOT ENOUGH?

Negotiations are under way between the Parliament, the Council of Ministers and the Commission to put this possibility into action. The going is not easy, however, as progress appears to be blocked. Some find that the Commission’s proposal does not go far enough, that the ESF budget represents only a small part of funds invested in Cohesion Policy and that the measure should be extended to the European Regional Development Fund, which was actually the Commission’s initial intention. Regions have already had the opportunity to express their disappointment through their representative associations. Luc Van den Brande, president of the Committee of the Regions, urged the Commission to extend the proposal to all Structural Funds. “At the moment, empty public coffers prevent many regions and cities from accessing the EU funds allocated to them, as they are unable to meet the co-financing criteria. This creates a downward spiral, where the regions hit hardest by the crisis are also the ones that are struggling the most to set up EU-funded projects,” he explains.

Dirk Ahner, director-general in DG Regio, recently commented that “the limit of what can be done” had been reached//“The regions hit hardest by the crisis are also the ones that are struggling the most to set up EU-funded projects” 

What has already been done

Before the summer, the EU adopted a first set of measures that simplify rules for implementing Structural Funds. This includes making funds available to member states more quickly for project pre-financing. More than six billion euro in additional advances were made available in 2009 for pre-finance investments, on top of the five billion euro initially planned.

These adjustments also allow for the co-financing by the ERDF of investments in energy efficiency and renewable energy in housing, such as the installation of double glazed windows and solar panels, insulation of walls and replacement of old boilers. They also provide for faster reimbursement of expenditure for major projects, greater possibilities for financial support from the European Investment Bank for financial engineering instruments, simplification of rules on the eligibility of expenditure and an increase in project pre-financing.