Aid concentration and performance: What Council wants
By Isabelle Smets | Tuesday 26 June 2012
The General Affairs Council, meeting on 26 June in Luxembourg, worked out an agreement on some of the more sensitive aspects of the EU’s future cohesion policy, such as thematic concentration of aid (what amounts on what priorities) and the performance framework (how to guarantee effective aid). By using derogations and widening their priorities, the states give themselves more latitude in selecting their investments than what the Commission initially proposed. Islands (Cyprus, Malta and Greece) tried to obtain special provisions for island regions – which the Danish EU Presidency was willing to grant – but these requests prompted others and in the end the Danes decided to reject them all. Germany, Sweden and the United Kingdom are pleased: they take a very negative view of requests for derogations, as does Regional Policy Commissioner Johannes Hahn. He warned that trying to address specific territorial characteristics would make the general rule into the exception.
In addition to the performance framework and concentration, the ministers also agreed rules that will apply to revenue-generating operations (how to co-finance projects that will generate net revenues once completed, such as toll motorways) and to financial instruments (loans, guarantees, risk-sharing instruments). These different elements are found in a partial general approach covering all the articles of the future Structural Fund regulations that concern these different aspects. Two basic rules apply, however: 1. nothing is agreed until everything has been agreed; and 2. this does not prejudge the outcome of the negotiations on the multiannual financial framework. What was agreed in Luxembourg takes into consideration, for example, the existence of a category of transition regions, which may or may not be the case in the end.
ERDF. The Commission proposes to concentrate a large share of aid under the European Regional Development Fund – at least 80% in developed and transition regions and at least 50% in less developed regions – on three thematic objectives: research, technological development and innovation; enhanced competitiveness of small and medium-sized enterprises; support for the shift to a low-carbon economy. These identical percentages are found in the Council’s general approach, but a fourth objective has been added: access to information and communication technologies. With the same budget, the states will therefore be able to choose from among a greater number of thematic objectives. The ministers also reserve a possibility to use a general derogation: failure to reach the minimum investment in one category of regions could be compensated for by larger investments in another category. In other words, falling short at regional level could be made up for at national level.
Investment priorities – the types of projects to be financed to achieve the more general thematic objectives – were also widened. Culture, business incubators, co-generation of heat and power, sustainable urban mobility, inland waterway and maritime transport, etc are added to the ERDF investment priorities. Further aid possibilities are provided for large companies as well, whereas the Commission reserves them first and foremost to SMEs.
European Social Fund. The thematic objectives of promoting employment and supporting labour mobility, promoting social inclusion, investing in education and lifelong learning – supported chiefly (though not solely) by the European Social Fund – will be given 45% to 50% of Structural Fund resources in the most developed regions, 35% to 40% in transition regions, and 20% to 25% in the less developed regions. The same general derogation as for the ERDF is provided, allowing compensation with investments in one category of regions for a shortfall in another category.
At least 20% of resources allocated to the ESF will also have to be reserved for the objective of promoting social inclusion and combating poverty. This is the general rule, but here, too, a derogation is possible: ERDF resources allocated to this objective may also count towards the 20%. Minimum investment percentages are also defined at operational programme level. Depending on the type of regions, from 60% to 80% of ESF support for each operational programme will have to be focused on at most four priorities (five if an operational programme covers the state’s entire territory).
Cohesion Funds. The Council includes private housing in aid possibilities for energy efficiency and renewable energy projects. So far, such aid has been restricted to public infrastructures.
The existence of a performance reserve – a share of funds to be reserved to programmes found to be outstanding in terms of meeting pre-established objectives – has not yet been decided. The negotiations on this point are being held in another body, the Friends of the Presidency. The states did agree, however, on the possible suspension or cancellation of funds if a programme fails to meet certain of its assigned objectives. There is a safeguard clause to cover the situation where objectives are not met “because of significant socio-economic or environmental developments”. Italy, Spain, Portugal and Bulgaria denounced this possibility to suspend funds, arguing that the fear of losing aid would discourage states from presenting ambitious projects.
Derogations and additional priorities: the states give themselves more latitude to choose their investments