EUROPEAN COMMISSION

Brussels, 6.8.2019

COM(2019) 299 final/2

CORRIGENDUM
This document corrects document COM(2019) 299 final of 25.6.2019
Concerns only the English version.
Correction of typographical errors.
The text shall read as follows:

REPORT FROM THE COMMISSION

TO THE EUROPEAN PARLIAMENT, THE COUNCIL AND THE COURT OF AUDITORS





2018 Annual Management and Performance Report for the EU Budget

Table of contents

FOREWORD    3

EXECUTIVE SUMMARY    7

INTRODUCTION    21

SECTION 1 — PERFORMANCE AND RESULTS    22

1.A result-oriented EU budget    23

2.Competitiveness for growth and jobs (budget heading 1A)    32

3.Economic, social and territorial cohesion (budget heading 1B)    68

4.Sustainable growth: natural resources (budget heading 2)    81

5.Security and citizenship (budget heading 3)    97

6.Global Europe (budget heading 4)    116

7.Special instruments    140

SECTION 2 — INTERNAL CONTROL AND FINANCIAL MANAGEMENT    144

1.The EU budget is well-managed    144

2.Control systems are cost-effective    149

3.Financial corrections and recoveries show that the multiannual control cycle protects the EU budget    160

4.The Commission's anti-fraud strategy has been updated    165

5.Management provides reasonable assurance and the financial impact of reservations is limited    168

6.Assurance obtained through the work of the Internal Audit Service    174

7.Summary of conclusions on the work carried out by the Audit Progress Committee    176

8.External audit and discharge: Learning from the past to improve the future    179

9.Organisational management    181

ANNEXES    

Foreword

It is my pleasure to present the 2018 Annual Management and Performance Report for the EU Budget. The report provides an overview of the performance, management and protection of the EU budget. It explains how the EU budget supports the EU political priorities and describes both the results achieved and the role of the Commission in ensuring the highest standards of financial management. This report is part of the Commission’s integrated financial and accountability reporting package. It fulfils our obligations under the financial regulation and is an essential part of our highly developed system of financial accountability.

Despite its relatively modest size, the EU budget makes a big difference for millions of Europeans. It complements national budgets and supports political priorities in areas where it has real value and where it can deliver results in the most efficient way. My guiding principle is that the EU budget should focus on areas where it can have a bigger impact than public spending at national level. For instance, no Member State alone can finance large infrastructures or research projects that have the required scale to compete with global players such as China or the United States. Some challenges the EU faces are global. Terrorism, organised crime, climate change, natural disasters or epidemics do not have borders. These challenges are best tackled on a pan-European level with the help of the EU budget.

But the EU budget, even if it proved to be flexible, is limited in size. Therefore, decision-making needs to be more informed and more evidence-based than ever, so that the money is allocated where it is the most needed. In this report, we describe the many ways in which the EU budget contributed to the achievement of our common goals in 2018.

The focus of 2018 was on strengthening the economic recovery by investing in key areas promoting job creation. The European Fund for Strategic Investments, the Connecting Europe Facility and the European Structural and Investment Funds all had a major role to play in this process. I invite you to discover the stories behind many EU investments on the ‘InvestEU’ portal (https://europa.eu/investeu). The EU budget also offered strong support in other priority areas such as the EU's comprehensive approach to migration, the security union, cutting-edge research, the EU's external action, while it also helped achieving crosscutting policy objectives such as climate action and biodiversity.

This report also sets out the steps we are taking to ensure that the EU budget is managed in accordance with the highest standards of sound financial management. Through this report, the Commission takes overall political responsibility for the management of the EU budget in 2018.

The Commission carefully monitors the implementation of the EU budget on the ground. If Member States or final beneficiaries are found to have spent EU money incorrectly, the Commission takes immediate steps to correct these errors and recover the funds as necessary. The Commission estimates that, after corrections and recoveries, the remaining level of error for the 2018 expenditure will be under 1%, well below the materiality threshold.

2018 was a continuation of the very significant progress we have made in recent years on financial management. The EU's systems to detect and correct errors and combat fraud are mature and robust. This has been recognised by the European Court of Auditors. We will remain vigilant and will continue to ensure that the EU budget is adequately protected in future years. This is particularly important in the context of an increasingly challenging political environment. Reporting consistently and effectively increases the accountability of EU spending, and not only for the purposes of sheer legal compliance. It helps to engage with citizens and with other stakeholders, and to restore their confidence and trust in the European Union.

2018 was also the year where the Commission made its proposals for the future multiannual financial framework, in May and June 2018. . An extensive spending review ( 1 ) was organised, analysing the performance of all programmes. My approach was to use EU added-value as a core criterion to underpin all future spending, boosting funding for new priorities, modernising existing programmes, simplifying and streamlining where possible and giving the Union a more flexible budget. I believe that the Commission has proposed a modern budget for a union that protects, empowers and defends, and which is balanced and realistic. A timely agreement on the future framework would confirm the shared commitment of the EU institutions to making the very most of every euro invested through the EU budget.

Günther H. Oettinger
Commissioner for Budget and Human Resources

Executive summary

The Annual Management and Performance Report for the EU Budget presents the latest information on the results achieved with the EU budget (Section 1), and on how the EU budget is managed and protected (Section 2).

Section 1 is structured by budget heading. It explains how the EU’s financial programmes have contributed to the EU’s political priorities. It also summarises the latest evaluation results on how these programmes have performed.

2018 was the fifth year of the current multiannual financial framework, which runs from 2014 to 2020. Due to the late adoption of the multiannual financial framework, delays were experienced at the beginning of the period. Now, the EU’s financial programmes are fully operational. They offer strong and tangible support to the EU’s political priorities in a variety of areas.

Budget heading 1A — Boosting jobs, growth and investment

When the Juncker Commission took office in the aftermath of the economic and financial crisis, it promised to get more people into work. Together with Member States it has delivered on that promise. More Europeans are in work than ever before, with 240,7 million people in employment. More than 12 million of those jobs have been created since the start of this Commission. Youth unemployment is at its lowest level since 2008, although it is still too high in many parts of the EU. The EU budget has been instrumental in these achievements and continues to offer a vital source of investment across Europe.

The priority for the EU budget in 2018 was to build on the economic recovery, in particular by giving a further boost to investment. Investment has picked up significantly thanks to more than EUR 408 billion ( 2 ) worth of investment triggered by the European Fund for Strategic Investments. This fund, launched by the Commission together with the European Investment Bank Group ( 3 ) in 2015, attracts private funding in areas such as transport, energy, health care, small and medium-sized enterprises as well as information and communication technologies. In this way it amplifies the impact of the EU budget. The lifetime of the European Fund for Strategic Investments was extended from mid-2018 until the end of 2020 with a new investment target of EUR 500 billion ( 4 ). It is expected that this plan will help create an estimated 1.4 million new jobs by 2020, while the EU’s gross domestic product will be boosted by an estimated 1.3%. Thanks to these investments, a further 11 million households enjoy high-speed internet access, more than 4 million households use energy from renewable sources, and 30 million Europeans benefit from better health care.

Strategic investments have also boosted economic growth and competitiveness by financing key transport, energy or telecommunications infrastructure. These investments focus on areas where the EU enables a greater impact than public spending at national level. The Connecting Europe Facility plays an important role in developing such infrastructures, which also prepare the ground for a less carbon-intensive EU energy network. In 2018, this facility made available EUR 1.4 billion in EU grants, to be combined with financing from the European Fund for Strategic Investments and other sources.

The EU budget is also delivering thanks to space programmes such as Galileo, Copernicus and EGNOS. No single Member State acting alone could have put 26 satellites into orbit, benefiting 500 million ( 5 ) users worldwide by the end of 2018. In 2018, four additional new Galileo satellites were launched for better monitoring of oceans, land and the atmosphere. EU space signals and data is transforming our lives with services such as enhanced navigation, precision farming, crop monitoring, responding to natural disasters, saving lives at sea, search and rescue of people equipped with distress beacons, and monitoring of vessels and oil spills.

2018 also marked a new chapter in European defence cooperation with the European Defence Fund. In 2018, EUR 40 million has been allocated to collaborative research in innovative defence technologies and products. The Commission has adopted the biennial work programmes to co-finance joint defence capability development projects in 2019-2020 with an EU contribution of EUR 500 million.

Supporting cutting-edge research and innovation

The EU budget continued to underpin the EU’s commitment to supporting cutting-edge research and innovation, focusing on cross-country collaboration, industrial relevance and economies of scale. Horizon 2020, the EU framework programme for research and innovation, is the world’s largest transnational research-funding programme. It is also the biggest EU research and innovation programme ever, with nearly EUR 80 billion of funding available over 7 years ( 7 ). In 2018, calls for proposals worth EUR 10 billion were launched for Horizon 2020.

Horizon 2020 provides a common strategic framework for the EU’s research and innovation funding. It is key to ensuring that the EU continues to produce world-class science and technology. It helps to remove barriers to innovation and makes it easier for the public and private sectors to work together in delivering solutions to major societal challenges. EU support for research and innovation stimulates cooperation between research teams across countries and between disciplines which is vital to making breakthrough discoveries. It allows the EU to deliver on priorities such as the Paris Agreement on climate change ( 8 ). Horizon 2020 has contributed directly to the overall objective of boosting Europe’s industrial leadership and competitiveness. It has been particularly successful in stimulating innovation by small and medium-sized enterprises. The overall target of 20% participation has even been surpassed ( 9 ).

Supporting young Europeans

The EU budget has created opportunities to study and travel abroad and helped young unemployed people to find work or enrol in training to increase their chances of finding a job. Every year, more than 3.5 million young people registered under the Youth Guarantee receive an offer of employment, education, a traineeship or apprenticeship. Since 2014, in total more than 14 million have been benefiting from this scheme.

Erasmus+ is one of the main ways for Europeans to experience European identity in all its diversity. In 2018, Erasmus+ enabled around 800 000 teachers, lecturers, trainers, education staff and youth workers to acquire new skills abroad and boost their future employability. The flagship programme demonstrated its flexibility with its support for setting-up of ‘European Universitites’ and the Erasmus+ virtual exchanges.

Moreover, the Commission launched a pilot initiative, DiscoverEU ( 10 ), which gives 18-year-old young people the opportunity to travel around Europe, learn from other cultures and explore their European identity. The Commission intends to develop DiscoverEU further and has therefore included it in its proposals for the next Eramus program.

The European Solidarity Corps ( 11 )programme got its own rules and budget and enabled a large number of young people to help; explore, learn and develop, through activities like helping socially deprived, taking care of the environment or reconstructing and bringing hope to communities after a natural disaster.

The EU budget’s contribution to implementing the Youth Guarantee has been substantial, by creating opportunities for young people to study and travel abroad and by helping them find work or access training to increase their chances of finding a job.

Budget heading 1B — Driving job creation, sustainable growth and innovation through cohesion policy

Cohesion policy, with a budget of EUR 352 billion (for 2014-2020), almost a third of the total EU budget, aims to reduce disparities and support the economic, social and territorial cohesion of the EU. The powerful contribution of this policy is evidenced by the strong catching-up of less-developed Member Sates and regions with the rest of the EU in terms of productivity and gross domestic product per head. The funds directly support the delivery of key EU priorities and the implementation of country-specific recommendations in the context of the European Semester, as well as ensure the necessary investment conditions through the follow-up of ex ante conditions set for the 2014-2020 programmes.

The EU budget continued to support Member States and regions in tackling new and persistent challenges, such as harnessing globalisation, tackling unemployment, addressing industrial change, embracing innovation and digitalisation, reskilling people, managing migration in the long run and fighting climate change, including the transition to less-carbon intensive economy and transports.

Budget heading 2 — The EU budget helps modernise the EU agricultural sector, to ensure safe, high-quality food, and create sustainable agriculture and rural development

The common agricultural policy has helped to achieve balanced territorial development and reduce the income gap between the agricultural sector and other sectors; and between Member States and regions. The policy also helps to keep the EU’s vital food production sustainable. Direct payments boost income and provide relative income stability to farmers facing significant price and production volatility.

The EU budget provides the necessary means for resilient, sustainable and competitive agriculture. Some 6.5 million farmers benefited from direct payments with this support constituting 38% of their farming income.

The European Maritime and Fisheries Fund supports environmentally sustainable, resource-efficient, innovative, competitive and knowledge-based fisheries and aquaculture. These efforts allow the EU to remain an international leader in sustainable ocean management.

The EU is a global front-runner in sustainability and climate policies

As part of its commitment to the fight against climate change, the EU has integrated EUR 32 billion spending on climate action across all EU programmes, in particular cohesion policy, energy, transport, research and innovation and the common agricultural policy, as well as the EU’s development policy, making the EU budget a key driver of sustainability. This represents 20.7% of the 2018 budget. The latest estimate is that it will be EUR 210 billion (19.7%) for the entire programming period.

Between 2014 and 2020, the European Regional Development Fund and Cohesion Fund are investing EUR 54.8 billion ( 13 ) targeting climate-related goals. These investments support the shift towards a low-carbon economy by promoting the production and distribution of energy derived from renewable sources, promoting energy efficiency, implementing smart distribution systems and research and innovation in low-carbon technologies; investing in adaptation to climate change, promoting investments to address specific risks, ensuring disaster resilience and developing disaster management systems.

In 2018, a total of EUR 522 million was allocated to the LIFE programme. Through this programme, the EU budget supports environmental and nature conservation projects and climate action. This includes major investment in projects that will enable more plastic to be reused. Turning this waste into high-quality raw materials for the car, construction and packaging industries is one of the ways in which LIFE gives practical support to the goals of the European strategy for plastics in a circular economy.

Budget heading 3 — The EU budget is a vital part of the EU’s comprehensive approach to migration policy

The EU budget supported the continued comprehensive European response to migration challenges and the management of the EU’s external borders. In 2018, the EU’s comprehensive approach to migration continued to operate on all fronts: deeper cooperation with partner countries; better-managed external borders; and more effective and operational tools to protect our borders and manage migration within the EU in a spirit of solidarity and responsibility. Dedicated instruments such as the Asylum, Migration and Integration Fund played an important role for immediate responses to migration issues alongside targeted support from cohesion policy for the longer-term integration of migrants and the EU’s external instruments. Work on the European agenda on migration made a positive contribution to replacing unsafe and uncontrolled migration with safe, orderly and regular migration.

Under the ongoing EU resettlement scheme, 20 Member States have pledged to resettle more than 50 000 persons by October 2019. At year-end 2018, over 24 000 of these pledges have already materialised, providing persons with shelter in the EU.

As well as in Turkey, the EU has provided substantial humanitarian support to internally displaced persons in side Syria as well as refugees and host communities in Jordan and Lebanon, as well as helping in Iraq and Egypt. Overall, the EU Regional Trust Fund in Response to the Syrian Crisis supported some 2 million Syrian refugees and hosting communities in 2018.

Financed by the EU budget, the European Border and Coast Guard Agency with its extended mandate has significantly strengthened its presence at the EU’s external borders. The aim is to support the Member States in their border-management activities and jointly implement integrated border management at EU level.

The EU budget continues to help make the EU a safer place to live and work

Security threats have intensified and diversified in Europe. They come in the form of terrorist attacks and new types of organised crime, as well as cybercrime. To protect the public against these threats, the EU has provided funding and supported cooperation, for instance, to fight money laundering, intercept and seize counterfeit products and combat disinformation campaigns.

The EU has shown solidarity within its borders by coordinating and financing disaster-relief efforts, supporting farmers affected by drought or employees affected by massive corporate restructuring. In light of the difficulties farmers faced during the summer drought, higher advanced payments were provided to help farmers feed their animals.

Budget heading 4 — The EU budget has helped the EU become a stronger global actor

The EU budget enabled the Union to keep its focus on investing in the sustainability and resilience of our partners, in particular through the European Neighbourhood Instrument and Instrument for Pre-Accession Assistance. The EU is helping neighbouring countries to further develop stable democratic institutions and, at the same time, become more prosperous. This helped to achieve stabitlity at Europe’s borders.

In 2018, the EU provided also leadership and support on the Iran nuclear deal ( 16 ), the Paris climate-change agreement, the UN sustainable development goals, new trade agreements with a strong sustainable development component, cooperation with the African Union ( 17 ) and relations with the United Nations.

Together with its Member States, the EU is the world’s biggest donor of humanitarian aid. This allows the EU to provide life-saving support to natural disasters and man-made conflicts worldwide.

Different instruments in the area of development cooperation support the EU in its commitment to deliver on the 2030 agenda for sustainable development in line with the European consensus on development ( 19 ). The EU seeks to target funds to countries most in need. It also proposed a paradigm shift in relations between the EU and Africa towards building a true and fair partnership focused on mutual economic interest and fully in line with Africa’s agenda 2063 ( 20 ) and flagship initiatives such as the African continental free trade area.

As part of the external investment plan for Europe, in 2018 the EU budget supported the mobilisation of finance into Africa and the European Neighbourhood ( 21 ). For that purpose, the European Fund for Sustainable Development is used to bring more private investments. In 2018, the Commission signed the first guarantee agreement (Nasira risk-sharing facility). This EU agreement of up to EUR 75 million is expected to mobilise investments for entrepreneurs in sub-Saharan Africa and the European Neighbourhood. It is expected to help create up to 800 000 jobs and benefit those who struggle to access affordable loans, such as internally displaced people, refugees, returnees, women and young people.

The Commission gives the highest priority to ensuring that the EU budget is well-managed and protected against errors and fraud

The Commission strives to achieve the highest standards in financial management in terms of effectiveness, efficiency and economy. It also seeks to ensure that audits and checks (‘controls’) are cost-effective. This is the focus of Section 2 of this report.

The Commission is responsible for ensuring that EU funds are properly spent, regardless of whether these funds are implemented directly by the Commission departments or by implementing partners. 71% of expenditure is executed by Member State authorities under shared management, and 8% through entrusted entities under indirect management.

To fulfil its responsibilities, the Commission has put in place an effective assurance and accountability model as well as a robust internal control framework. Within this framework — where applicable in collaboration with Member States and entrusted entities (based on their obligations to protect the EU budget) — the Commission departments take measures to prevent errors, irregularities and fraud; and, when these occur, they take action to remedy the situation. In addition, the European Anti-Fraud Office is mandated to conduct independent investigations into fraud and corruption involving EU funds and to develop EU policies to counter fraud.

2018 also saw the adoption of the new financial regulation, which brings in particular significant simplification of financial rules for beneficiaries.

The risk to the legality and regularity of financial transactions is below 2%

The Commission’s objective for the ‘risk at payment’ affecting EU revenues and expenditure, which is estimated after preventive controls have taken place but before corrective measures have been applied, is to stay below 2% — which it achieved again in 2018. On an overall basis, the ‘risk at payment’ is estimated to be 1.7% of the total relevant 2018 expenditure. Departments are undertaking action for those segments for which the risk at payment is above 2%.

The multiannual nature of the EU’s financial programmes make it possible to correct errors even years after the payments were made, until the closure of the programmes. The departments have estimated the overall future corrections to be 0.9% of total relevant 2018 expenditure.

The Commission’s aim in managing the EU budget is to ensure that, once a programme is closed and all verifications have been carried out, the remaining ‘risk at closure’ is very low. Overall, the Commission estimates this to be only 0.8% of 2018 total relevant expenditure — i.e. below 1%.

For the second year in a row, in 2018 the European Court of Auditors gave a qualified rather than a negative opinion on the legality and regularity of payments under the 2017 EU budget. This confirms that significant progress has been made and that is a clean bill of health regarding a substantial part of the EU budget.

Stepping up the fight against fraud

The Commission has a firm and long-standing line of zero tolerance to fraud. The Commission’s revised and strengthened anti-fraud strategy provides a robust policy framework for the prevention, detection, investigation and response to fraud, and contributes to the good functioning of the Commission departments when protecting the financial interests of the EU. The revised anti-fraud strategy will help ensure that Commission departments are fully prepared for the implementation of the 2021-2027 multiannual financial framework.

The new strategy takes into account important developments in EU anti-fraud legislation (such as the establishment of the European Public Prosecutor’s Office) as well as recent findings by the European Court of Auditors on fraud risk management in EU spending. The adoption of the revised strategy will improve further the fight against fraud.

The proposals for the new financial programmes have also been subject to fraud proofing by the European Anti-Fraud Office. The new 2018 financial regulation has strengthened the treatment of conflicts of interest, and the Commission has made important proposals to protect the EU budget from generalised deficiencies in the rule of law in the Member States, including conditioning the continuation of EU payments to the respect of the rule of law principles. The early detection and exclusion system has been further enhanced. These measures will protect the EU budget even more effectively in the coming years.

Management provides reasonable assurance and the Commission takes political responsibility for the management of the EU budget

Based on the assurance-building blocks that support their declaration, every authorising officer by delegation provided reasonable assurance that (1) the information contained in their annual activity report gives a true and fair view; (2) the resources assigned to their activities have been used for their intended purpose and (3) the control procedures in place give the necessary guarantees concerning the legality and regularity of the underlying transactions — if needed qualified by (a) reservation(s) for full transparency and further action.

40 reservations were made — two more than last year. For every reservation, an action plan is in place to address the underlying weaknesses and mitigate the related risks. Half of the reservations concern legacy programmes for 2007-2013 and have very limited financial impact.

A new long-term budget for an EU that protects, empowers and defends

In parallel to the budget implementation work, 2018 was also the year to kick-start the pocess towards a new multiannual financial framework for the European Union. In May 2018, the Commission presented its proposals for a new, modern long-term budget for the EU, covering the period 2021-2027. 

The proposals are designed to deliver on the political priorities agreed by leaders in Bratislava and Rome. Under these proposals, funding would be stepped up in a range of areas vital to Europe’s future, including the coordinated European response to the challenges of migration, the fight against terrorism and organised crime, digital transformation, climate action, programmes for young people and research and innovation, while making sure that traditional policies supporting the key union objective of solidarity are modernised and retain a meaningful level of funding, for all Member States and regions when it comes to cohesion policy.

The Commission’s proposals are based on a spending review, a comprehensive assessment of the lessons learned from current and previous programmes. This made it possible for the Commission to propose essential modernisation features:

·the strong focus on European added value and the need to provide adequate support for new and pressing priorities such as research and innovation, the digital economy, young people, migration and border management, security, defence and external action; and a strengthened emphasis on sustainability including a more ambitious goal for climate mainstreaming;

·the streamlined and more transparent structure of the future budget;

·the radical reduction in the number of programmes and the creation of new integrated programmes in areas like investing in people, the single market, strategic investments, rights and values and external actions, and the increased focus on synergies between instruments;

·the simplification of funding rules to reduce red tape for beneficiaries and managing authorities, and a greater focus on performance and results; and

·a more flexible budget to be able react rapidly in a fast-changing world.

Agreement was reached by the Eurogroup on the features of a budgetary instrument for convergence and competitiveness for the euro area. This will promote cohesion within the Union by strengthening the resilience of the Economic and Monetary Union. It is also widely accepted that the new mechanism to ensure that generalised deficiencies as regards the rule of law do not put the budget at risk will be an essential feature of an agreement on the future multiannual financial framework. Work has also progressed on the Commission’s proposals to modernise the revenue side of the EU budget.Securing an agreement on the future framework is a high priority for the months ahead, while continuing to work on maximising the contribution of the current financial programmes to the EU’s prosperity and security.

Strengthening the Commission’s corporate governance

In November 2018, the Commission adopted a set of targeted measures to strengthen corporate governance. This reform strengthens the Commission’s well-established and effective model of financial accountability, based on a clear division of responsibility between the political, corporate and departmental levels. The centrepiece of this reform is a rationalisation of corporate governance bodies under the overall authority of the senior-level Corporate Management Board, chaired by the Secretary-General. The Corporate Management Board will provide oversight and strategic guidance in areas including human resource allocation, risk management, strategic planning and programming, data protection, security and business continuity, corporate communication and anti-fraud policy. This reform also simplifies the information-technology governance and security landscape, strengthens corporate risk management and clarifies the role of the Audit Progress Committee.

Introduction

The 2018 Annual Management and Performance Report for the EU Budget is the Commission’s main input to the annual discharge ( 22 ) procedure by which the European Parliament and the Council scrutinise the implementation of the EU budget. The Commission attaches great importance to ensuring that the EU budget is managed responsibly and correctly, and to working with all parties involved to make sure that it delivers tangible results on the ground.

The report presents an overview of the latest information on the performance of the budget. It also contains detailed reporting on issues related to the management and protection of the EU budget. This report has the following two main sections.

Section 1 describes, with examples, how the EU budget supports the EU’s political priorities. It provides the latest available data on results achieved up to the end of 2018. This reporting draws on information from the 2018 annual activity reports produced by all Commission departments, and other sources such as programme statements, evaluation reports, studies and implementation reports on EU programmes. The central question of this section is whether the EU budget is being put to the best possible use to deliver tangible results for all Europeans. The Commission cannot ensure this on its own — it is a joint responsibility with the Member States, regions, non-governmental organisations, beneficiaries and all those involved in implementing the EU budget. This section incorporates the evaluation ( 23 ) of the EU’s finances based on the results achieved. Further performance information is available in the programme statements and the programme performance overview published by the Commission together with the draft annual budget.

Section 2 reports on developments in relation to internal control, financial management and the protection of the EU budget. This section is also based on the annual activity reports produced by each Commission department, in which the internal control environment and related issues are described in detail. Where issues were encountered in the course of the year, the report describes how Commission departments have tackled them. This section summarises information on:

·managing legality and regularity risks;

·managing the cost-effectiveness of controls and revising anti-fraud strategies;

·the protection of the EU budget; and

·the management assurance provided to the College of Commissioners.

The management assurance received from all departments and the assurance obtained through internal audit work form the basis for the report’s overall conclusion. This conclusion enables the Commission, by adopting the report, to take overall political responsibility for the management of the 2018 EU budget.

The 2018 Annual Management and Performance Report for the EU budget is part of the broader package of integrated financial and accountability reporting ( 24 ). This also includes the annual accounts ( 25 ), a long-term forecast of future inflows and outflows ( 26 ) covering the next 5 years, the report on internal audits ( 27 ) and the report on the follow-up ( 28 ) to the discharge.

Section 1
Performance and results

Generating added value from every euro spent is of key importance to the Commission. President Juncker set  the tone at the beginning of his mandate: ‘It is not enough to allocate money wisely. We will have to do more, with less. We need to get the best out of the budget and spend money smartly. […] People want us to achieve results. They also want to know how we spend the tax payer’s money.’ ( 29 )

The EU budget focuses on areas where pooling resources to tackle common challenges for all Europeans can deliver results that could not be achieved as effectively or efficiently by Member States acting alone. This applies in areas as diverse as cross-border infrastructure, external border management, large-scale space projects and pan-European research. The focus on EU added value is at the heart of the Commission's proposals for the 2021-2027 multiannual financial framework.

This section begins with an overview of the EU budget and its performance framework. This is followed by a summary of how the current and future long-term budget contributes to the political agenda for the EU set out by leaders in Bratislava, Rome and Sibiu, as well as to international priorities such as climate targets and the UN sustainable development goals.

The section then presents the latest information on results achieved with the EU budget up until the end of 2018. This information is structured around the headings in the current multiannual financial framework. The report also describes how these programmes contribute to the political priorities of the Juncker Commission. The type of data reported depends on the level of maturity of the programmes, ranging from input data to the results of spending from the early part of this period. Final evaluations on the impact of the programmes are not yet available, hence definitive reporting on performance will not be possible until later on. The report covers areas where performance has fallen short of expectations or where shortcomings have been identified in programme design by evaluations and audit work. This information is used to inform implementation decisions on the current financial programmes and to inform the legislators shaping the future long-term budget.

A result-oriented EU budget

The EU budget

The EU budget is a key instrument in the implementation of European policies and priorities. Unlike national budgets, the EU budget is mainly focused on supporting strategic investments over the medium to longer term and on using its leverage to catalyse investment from other public and private sources. It complements national budgets to address common challenges faced by the Member States and creating opportunities for the EU as a whole. The EU's financial programmes are managed in some cases directly by the Commission for example in the area of research or together with the Member States (shared management), such as in cohesion policy. Some two thirds of the EU budget is managed through shared management.

The EU uses innovative financial instruments as a smart way to deploy EU budgetary resources. Innovative financial instruments attract funding from other public or private investors for economically viable projects in areas where there are market failures or investment gaps. Examples include sectors with high economic growth or innovative business activities. The fact that the EU invests risk capital in a certain fund or covers part of the risk associated with a certain type of projects can reassure other investors and encourage them to invest alongside the EU. The loan-guarantee facility and the equity facility for growth under the programme for the competitiveness of enterprises and small and medium-sized enterprises are prime examples of such financial instruments. Financial instruments are also used under other EU programmes, such as Horizon 2020, the EU programme for employment and social innovation, the Creative Europe programme, the Connecting Europe Facility and under the EU’s external policy programmes.

The performance framework for the EU budget

A robust performance framework for the EU budget is a prerequisite for result-oriented and well-managed EU programmes. For the 2014-2020 multiannual financial framework, performance frameworks have been included as a new, compulsory feature in the legal basis of all financial programmes. This has resulted in a stronger focus on results across the budget. These frameworks entail the setting of clear and measurable objectives and indicators as well as the necessary monitoring, reporting and evaluation arrangements.

The indicators in these frameworks, together with other sources of qualitative and quantitative performance information such as evaluations, provide a sound basis for assessing programme performance and with it progress towards the agreed objectives. They also help anticipate and resolve problems in programme implementation when they arise.

During the early years of a programme’s implementation, performance information is based on inputs (i.e. the financial allocation to a particular programme) and, gradually, on outputs (i.e. the direct deliverables from a given project.) This type of information gives a good initial indication of how and where the EU budget is being spent. As a programme is implemented, information on the results and to a lesser extent the longer-term impact of spending will become available.

To make the European structural and investment funds (ESIF) more performance oriented, a mechanism with a performance reserve has been foreseen. This reserve will be released in 2019 to programmes that had achieved their predefined milestones by the end of 2018. In the case of programmes and priorities that had not achieved their milestones, resources will be reallocated to other priorities.

In addition to the performance framework, audits conducted by internal and external auditors also help improve the performance of programmes, as well as the efficiency and effectiveness of the operations, management systems and procedures of the bodies and institutions that manage EU funds. Audit work has also helped the Commission to improve the quality of its performance reporting. Recent recommendations from the European Court of Auditors have led to more balanced reporting in the annual activity reports, with more attention given to challenges encountered, to a stronger focus on the reliability and quality of data, and clearer explanations of how data on performance has been used to improve performance.

Proposals for a new, modern and focused long-term budget, tightly geared to the political priorities

The Commission services conducted a comprehensive spending review of the EU budget in 2017 and 2018 setting out the evidence and the analytical underpinning for the Commission’s proposals for the future multiannual financial framework and the accompanying sectorial programmes. The review was designed to identify the features of current programmes that have proven their worth and should be replicated or amplified in the future financial programmes. It also identified the areas where reform was needed to make full use of the potential of the EU budget. These were: i) focus on EU added value; ii) streamlining the budget and exploiting synergies between programmes; iii) simplification and sound financial management; iv) flexibility and the ability to respond to crises; v) focus on performance; and vi) coherence with main political objectives and values.

In these proposals, the Commission increasinlgy focused on the European added value of EU spending. The proposals also include measures to improve the overall performance framework, for example by streamlining the number of programmes and improving how they work together, creating more flexibility and using a smaller number of higher quality indicators to monitor and report on programme performance.

The EU budget reflects the EU’s commonly agreed priorities and shows how they can be delivered. The political agenda set out by leaders in Bratislava and Rome is the roadmap for the future long-term budget, which the Commission proposed ( 30 ) in May 2018 and which covers the period 2021-2027.

The proposals modernise the budget by providing a significant boost to funding in several key strategic areas. From innovation to the digital economy, from training and employment for young people to climate action and the environment, from migration and border management to security, defence and external action, the budget will invest where it really counts.

The next long-term budget should also be simpler and more transparent so that stakeholders can make the most out of it. The European Parliament and the Council as well as beneficiaries, large and small, have asked for this and the Commission has been listening and proposed a radically simplified budget.

The key features of the next EU budget are:

The EU budget and the Europe 2020 strategy

The current long-term budget contributes to the Europe 2020 strategy for smart, sustainable and inclusive growth. The targets are a shared responsibility of the EU and its Member States, and their achievement requires the combination of multiple policy tools, including the EU and national budgets.

The Commission uses nine indicators to monitor the Europe 2020 headline targets ( 31 ). Information on progress is updated regularly and published on Eurostat’s website. The table below presents the latest available data for these indicators.

Member States are making progress towards the goals they set 9 years ago in the Europe 2020 strategy. Overall, the EU is nearing its targets on education, energy, climate and employment. 14 Member States have already achieved their national targets of reducing early-school leaving and in increasing the share of the population with tertiary education. 11 Member States have already achieved a share of renewable energy that corresponds to their national target for 2020. The EU target of 75% employment by 2020 is on track, assuming the current trend continues, and seven Member States have already achieved their national goals. This is a remarkable achievement given the severe impact of the crisis on employment. However, the number of people at risk of poverty or social exclusion peaked in 2012 but has since fallen to around pre-crisis levels. As a result, the target is unlikely to be met in 2020. Likewise, the goal of 3% of gross domestic product value as investment in research and development is far off and will require major efforts if it is to be met.

The contribution to Europe 2020 should not be confined within the limits to a single programme. It should be seen as a mutually reinforced contribution of the EU budget as a whole. Overall, it is estimated that 59% of the EU budget commitments in 2018 were linked to the Europe 2020 strategy.

Table: Progress towards Europe 2020 targets.

Source: COM(2019) 150 final, 27 February 2019.

Crosscutting spending on climate action and biodiversity

The EU budget is also an important tool for achieving crosscutting policy objectives such as climate action and biodiversity. To respond to challenges and investment needs related to climate change, the EU has decided that at least 20% of its budget for 2014-2020 — as much as EUR 200 billion over the whole period — should be spent on climate change-related action. This approach is called ‘climate mainstreaming’. To achieve this result, mitigation and adaptation actions are being integrated into all major EU spending programmes, in particular regional development and the Cohesion Fund, energy, transport, research and innovation, the common agricultural policy and the EU’s development policy. The estimates for climate-related expenditures are monitored on an annual basis with ‘EU climate markers’ adapted from the Organisation for Economic Co-operation and Development’s ‘Rio markers’. In 2018, the amount was more than EUR 32 billion, 20.7% ( 33 ) of the 2018 budget. The total cumulative amount for climate mainstreaming was more than EUR 141 billion by the end of 2018. The latest estimate ( 34 ) is that it will be EUR 210 billion (19.7%) for the entire programming period.

Chart: Mainstreaming of climate action in 2018. All amounts in the chart are in EUR million.

Source: European Commission.

The EU is also making a concerted effort to support biodiversity. The related expenditure was more than EUR 13 billion, 8.5% ( 35 ) of the 2018 budget. These funds aim to limit and reverse the decline of biodiversity in the EU, making an important contribution to the Europe 2020 sustainable growth objectives.

The EU budget and the UN sustainable development goals

The sustainable development goals are the blueprint to achieve a better and more sustainable future for all. They address the global challenges we face, including those related to poverty, inequality, climate, environmental degradation, prosperity, peace and justice. The UN adopted these goals in September 2015 as part of its 2030 agenda for sustainable development. This agenda gave a new impetus to global efforts to achieve sustainable development.

The EU has played an important role in shaping the 2030 agenda through public consultations, dialogue with its partners and in-depth research. The EU is committed to playing an active role in maximising progress towards the sustainable development goals, as outlined in its communication ( 36 ) on the ‘Next steps for a sustainable European future’. The sustainable development goals are firmly anchored in the European treaties and mainstreamed in all its programmes, sectoral policies and initiatives.

Each year the EU continues its efforts via its policy and regulatory instruments to pursue the sustainable development goals and plays a key role in supporting, coordinating and complementing Member States’ policies, also in financial terms, via the EU budget.

The 2018 programme statements highlighted in particular the most recent and relevant initiatives contributing to the sustainable development goals, although often in an indirect and non-quantifiable way. These elements are provided for information purposes and do not constitute the official reporting on the EU budget contribution towards the sustainable development goals. As the goals are interlinked, many EU actions can contribute to several of them.

The 2018 EU budget

2018 was the fifth year of implementation of the multiannual financial framework 2014-2020. Two specific priorities were formulated for the 2018 budget. One was a European response to the new challenges deriving from the complex geopolitical environment, from migration management to the protection of the EU's external borders and the security of its citizens. The other was strategic investment and sustainable growth, to support economic cohesion, and create jobs, in particular for young people’. ( 37 ) More detailed information on the progress made by programmes on specific indicators and objectives can be found in the programmes’ performance overview ( 38 ), which is an extract of the programme statements attached to the draft budget.

Chart: The 2018 EU budget, commitment appropriations, per budget heading. All amounts in EUR million.

Source: European Commission.

In 2018, the total amount of commitments implemented from the EU budget, including amending budgets, amounted to EUR 160 billion ( 39 ). Around half of this (50% or EUR 77.5 billion) was allocated to heading 1 ‘Smart and inclusive growth’ split between heading 1A ‘Competitiveness for growth and jobs’ (28%) and heading 1B ‘Economic, social and territorial cohesion’ (72%). heading 2 ‘Sustainable growth: natural resources’ was the second largest area of the budget with EUR 58.8 billion, accounting for 37%. EUR 3.5 billion was allocated to budget heading 3 ‘security and citizenship’, including on reinforcing the external borders of the EU and addressing the refugee crisis and irregular migration. EUR 10.4 billion was allocated to actions outside the EU and EUR 9.5 billion was spent on the administration of the EU institutions.

In 2018, six draft amending budgets were adopted. Apart from the standard adjustments on the revenue side, two draft amending budgets were adopted for the mobilisation of the European Solidarity Fund. This report describes the many instances where this fund supports EU countries struck by natural disasters and helps them recover quickly.

Further adjustments were needed for the EU budget contribution to the facility for refugees in Turkey. This included cancelling the reserve related to the support to Turkey from the Instrument for Pre-Accession Assistance, and strengthening the European Neighbourhood Instrument to fund additional actions, for example linked to the central Mediterranean migratory route.

The EU budget helps turn political priorities into a reality. Therefore, the EU is directing money to where the needs are. The 2018 EU budget, a budget for all, created more jobs, more growth and more investments.

List of programmes covered in this report

Horizon 2020    

Euratom    

ITER    

European Fund for Strategic Investments    

Connecting Europe Facility    

Competitiveness of Enterprises and small and medium-sized enterprises    

ERASMUS+    

European Solidarity Corps    

Employment and social innovation (EaSI)    

Space (Copernicus, Galileo and the European Geostationary Navigation Overlay Service)    

European Defence Industrial Development Programme    

Customs 2020    

Fiscalis 2020    

Hercule III    

Pericles 2020    

Anti-fraud information system     

ISA2 — Interoperability solutions and common frameworks for European public administration, businesses and citizens    

European statistical programme    

Nuclear-decommissioning assistance programmes in Bulgaria, Slovakia and Lithuania    

European Regional Development Fund and Cohesion Fund    

European Social Fund    

Fund for European Aid to the Most Deprived    

European Agricultural Guarantee Fund    

European Agricultural Fund for Rural Development    

European Maritime and Fisheries Fund    

Regional fisheries management organisations and fisheries agreements    

LIFE — programme for the environment and climate action    

Asylum, Migration and Integration Fund    

Internal Security Fund    

Health programme    

Food and feed    

Consumer Programme    

Creative Europe    

Rights, equality and citizenship programme    

Justice programme    

Europe for Citizens Programme    

EU Civil Protection Mechanism    

Instrument for Pre-Accession Assistance    

European Neighbourhood Instrument    

Development Cooperation Instrument (DCI)    

European Fund for Sustainable Development (EFSD)    

EU humanitarian-aid programme    

EU aid volunteers initiative    

European Instrument for Democracy and Human Rights    

Common Foreign and Security Policy    

Instrument contributing to Stability and Peace    

Partnership Instrument for Cooperation with Third Countries    

Cooperation with Greenland    

Support for the Turkish Cypriot community    

Instrument for Nuclear Safety Cooperation    

Facility for refugees in Turkey    

Guarantee Fund for External Action    

EU Civil Protection Mechanism    

Emergency aid reserve    

Flexibility instrument    

EU Solidarity Fund    

European Globalisation Adjustment Fund    

Competitiveness for growth and jobs (budget heading 1A)

When President Juncker set out his political guidelines at the start of his mandate he said that ‘My first priority as Commission President will be to strengthen Europe’s competitiveness and to stimulate investment for the purposes of job creation.’ The Commission has delivered on its promise to get more people into work. More Europeans are in work than ever before, with 12.4 million new jobs created since 2014, unemployment down to 6.8%, and youth unemployment (14%) back to its 2008 level. Investment has almost returned to pre-crisis levels and public finances have improved in terms of debt and deficit levels.

The EU budget has been instrumental in these achievements and is a vital source of investment across Europe. EUR 22 billion was allocated to the programmes on competitiveness for growth and jobs (commitments in heading 1A) in 2018, representing almost 14% of total annual budget expenditure.

This report first covers the programmes for research and innovation (Horizon 2020 framework programme, Euratom and ITER). This is followed by the programmes targeting strategic investments (European Fund for Strategic Investments, the Connecting Europe Facility for developing trans-European networks in transport, energy and the digital sector) and the programmes that support the single market (competitiveness, anti-fraud, fiscal coordination). The Erasmus+, programme for education, training, youth and sport enabled around 600 000 young people and 190 000 members of staff from educational institutions and youth organisations to participate in learning activities.

Chart: Main programmes financed in 2018 under heading 1A, Competitiveness for growth and jobs. All amounts in EUR million. The category ‘other programmes’ includes among other nuclear safety and decommissioning, customs, Fiscalis and anti-fraud, energy projects to aid economic recovery (EERP) decentralised agencies, Other actions and programmes, Pilot projects and preparatory actions, Actions financed under the prerogatives of the Commission and specific competences conferred to the Commission.

Source: European Commission.

Europe’s future prosperity depends on the investment decisions taken today. In view of the next multiannual financial framework, the Commission has proposed to step up investment in key areas such as research, strategic infrastructure and digital transformation.

The programmes under this budget heading contribute mainly to the Juncker Commission priorities of ‘jobs, growth and investment’, ‘digital single market’, ‘energy union and climate’ and ‘a deeper and fairer economic and monetary union’. Improving competitiveness and boosting sustainable jobs and growth are core of the discussions on the strategic agenda for the future.

Horizon 2020

Programme objectives

Horizon 2020, the EU framework programme for research and innovation, is the world’s largest transnational research-funding programme. It is also the biggest EU research and innovation programme ever with nearly EUR 80 billion of funding available over 7 years (2014 to 2020). In addition, Horizon 2020 has leveraged approximately EUR 13 billion of private funds and has mobilised EUR 29.6 billion via debt financing.

The programme plays a central role in providing a common strategic framework for the EU’s research and innovation funding. Its goal is to ensure Europe produces world-class science and technology, to remove barriers to innovation and to make it easier for the public and private sectors to work together in delivering solutions to major challenges that our society faces. EU support for research and innovation adds value by encouraging cooperation between research teams across countries and disciplines, which is vital in making breakthrough discoveries. It allows the EU to deliver on priorities such as the Paris Agreement on climate change.

The general objective of this programme is to build a society and an economy based on knowledge and innovation across the whole EU while contributing to sustainable development. The specific objectives are the following.

Implementation and latest achievements

By the end of 2018, 679 Horizon 2020 calls for proposals had been concluded. Beneficiaries responded massively to these calls and submitted almost 192 000 eligible proposals, requesting a total EU financial contribution of EUR 290 billion. Out of these, 23 250 proposals were retained for funding, bringing the overall success rate of eligible full proposals in the first 5 years to 12%. A total of 21 599 grant agreements were signed by the end of December 2018, with a budget allocation of EUR 39 billion in EU funding. This allocation is expected to grow even more as some of the grants from the 2018 calls will be signed in 2019.

The programme’s impact ultimately depends on the dissemination and exploitation of research and innovation data and results. This is why the work programme has been further fine-tuned to increase the availability of such data and results. Initiatives to boost marketable innovations have also been introduced in 2018, most notably the introduction of the European Innovation Council pilot, with a budget of EUR 2.7 billion.

Assessment and evaluation

The 2017 interim evaluation ( 40 ) highlighted that Horizon 2020 is a very attractive, relevant research-funding programme. This attractiveness and continued relevance has, however, resulted in large-scale oversubscription. The evaluation found a success rate of only 11.6% compared to 18.5% for its predecessor, the Seventh Framework Programme. An additional EUR 62.4 billion would be needed to fund all proposals independently evaluated above the stringent quality threshold. The opportunity cost in terms of the waste of resources for applicants submitting high quality but unsuccessful projects is estimated at EUR 636 million a year ( 41 ).

The interim evaluation also suggested that the programme could be further simplified. The European Court of Auditors acknowledged in its Special report No 28/2018 ( 42 ) that Horizon 2020 has made great progress in terms of simplification compared to the Seventh Framework Programme. The administrative burden on those applying for and managing research grants has been reduced and further simplification suggestions have been incorporated into the new Horizon Europe programme proposal. Simplifying funding rules under the new multiannual financial framework is the major feature of the new generation of programmes. For example through ‘lump-sum funding’, would allow for payment based on the achievement of agreed targets rather than based on eligible costs. This simplification will make administration more light and will lower the risk of error. This method was tested in pilot calls in 2018 and testing will continue in 2019.

In 2018, the Commission proposed a policy package for the future framework programme for research and innovation, called Horizon Europe ( 43 ). It will help Europe remain at the forefront of global research and innovation. As highlighted in the report ( 44 ) of the High-Level Group, chaired by Pascal Lamy, investment in research will allow the EU to compete with other developed and emerging economies, ensure a prosperous future for its citizens and preserve its unique social model. Building on the success of Horizon 2020, the new programme will continue to promote research excellence and strengthen the focus on innovation, for instance through the development of prototypes, intangible assets, knowledge and technology transfer.

A new European Innovation Council will provide a one-stop shop for high potential and disruptive innovators, aiming to make Europe a front-runner in market-creating innovation.

Euratom

Programme objectives

Nuclear and ionising radiation technologies continue to play an important role, whether this concerns energy and contributing to the security of supply, the use of radiation in medical and industrial applications or the management of spent fuel and radioactive waste. Safe and secure use of these technologies is of paramount importance and research programmes help maintain the highest standards of safety, security and safeguards in this field. The Euratom programme ( 45 ) also focuses on the development of fusion energy, a potentially inexhaustible and climate-friendly energy source.

The programme operates through ‘indirect action’ funding to third parties and through ‘direct’ actions carried out by the Commission’s Joint Research Centre.

Implementation and latest achievements

Most of the fission projects selected are in the areas of nuclear safety (41%), research infrastructures (22%), waste management (15%) and radiation protection (13%).

The development of a high-temperature superconductor won the 2016 Euratom Prize for Innovation in Fusion Research. It can now be fabricated in 7-metre lengths. It has also been cold tested at liquid nitrogen temperature and high current, i.e. under fusion conditions.

The Joint Research Centre has been contributing to the Collaborative International Evaluated Library Organisation, an initiative which aims at the worldwide standardisation of evaluated nuclear data for harmonised safety assessments in nuclear energy.

Assessment and evaluation

The 2017 interim evaluation ( 46 ) shows that a key part of the European added value of Euratom indirect actions is the EU’s ability to mobilise a wider pool of excellence, expertise and multi-disciplinarity in nuclear research than individual Member States could. Through cooperative research and innovation, the Euratom programme also enables a Europe-wide approach to the improvement of nuclear safety and radiation protection in all areas of application. This complements the Euratom directives on nuclear safety, radioactive-waste management and basic safety standards and involves demonstrable scientific and technological progress in all areas that would not have been possible without a collaborative pan-European approach. The Euratom programme also enables a much more broad-based coordination of education and training throughout Europe, the use of research infrastructures and international cooperation. This is particular beneficial for smaller Member States, which can then take advantage of economies of scale afforded by the Europe-wide pooling effect.

Preparatory work for the future Euratom research and training programme included two evaluation studies, two high-level expert groups assisting the Commission, a public stakeholder consultation and contributions to the Horizon Europe impact assessment ( 47 ). In addressing the programme’s shortcomings identified in the evaluation, the proposal for the new Euratom programme has been simplified (through, for example, a reduction in the number of objectives from 14 to four) and synergies with Horizon Europe will be better exploited (e.g. in health research and the Marie Skłodowska-Curie actions).

ITER

Programme objectives

ITER is one of the most ambitious energy projects in the world today. The project was brought about through the collaboration of seven parties: the EU, China, India, Japan, Korea, Russia and the United States. The aim is to build and operate an experimental fusion reactor which will be used to explore and demonstrate the scientific and technological feasibility of using fusion as an energy source ( 48 ). ITER will not produce electricity as its purpose is more of an experimental nature: resolving critical scientific and technical issues in order to take fusion to the point where industrial applications can be designed. ITER is expected to be the first fusion device in the world that generates more power than is put into it and thus will be the proof of principle opening the way for the next step: a demonstration fusion power plant ( 49 ).

Implementation and latest achievements ( 50 )

The construction of ITER started in 2007. The EU is responsible for 45% of the construction. High-tech and advanced civil-engineering industries are involved in its development. To date, over 700 contracts and grants have been awarded to companies, including small and medium-sized enterprises, in 24 countries, for a value of almost EUR 5 billion.

Construction is now progressing visibly and steadily on-site and completion as of November 2018 is at 60%. The bioshield of the Tokamak building is complete and its scaffolding was removed in February 2018. At its base the construction of the crown, a vital component under Euratom’s responsibility, was completed on schedule in August. Three United States-supplied drain tanks and four Chinese-supplied vapour suppression tanks were installed the same month. The first vacuum vessel sector, under construction in Korea, is more than 80% finished. Russia has completed its production of a poloidal field conductor for the ITER magnet system, and India has nearly completed fabrication of the cryostat lower cylinder and base on-site in Cadarache. The manufacturing of toroidal field coil winding packs, as well as cold testing and insertion into precision-fabricated cases, is well advanced in Europe and Japan. Overall, substantial progress is being made for every major ITER component, system and structure ( 51 ).

ITER is a technologically complex, first-of-a-kind, large-scale international project and as such it has faced significant challenges which have led to increased costs and delays. However, the progress made in 2018 confirmed the robustness of the actions undertaken to address these issues ( 52 ).

Assessment and evaluation

The recently concluded evaluation of ITER ( 53 ) underlined an improvement in project management. First, the European agency in charge of the EU’s contribution to ITER (fusion for energy, or F4E) improved its control and monitoring practices. A number of key performance indicators measuring project progress and cost-efficiency are now being closely monitored ( 54 ). Second, the so-called staged approach is one of the most crucial parts of the management turnaround as it divides the work into four stages, each building towards a key goal. During each stage of the project, only activities that are critical to achieving that stage’s goal are carried out ( 55 ).

Under the next multiannual financial framework, the EU will continue its support of ITER through F4E, ensuring that the disbursement of funding is based on performance and actual delivery on the ground.

European Fund for Strategic Investments

Programme objectives

The investment plan for Europe, also known as ‘the Juncker Plan’, launched by President Jean-Claude Juncker in 2015, was a key response to the economic and financial crisis and its negative impact on the level of investment in the EU. The plan remained one of the main priorities for the Commission in 2018. It is composed of three pillars: the European Fund for Strategic Investments provides an EU guarantee to mobilise private investment; the European Investment Advisory Hub and the European Investment Project Portal provide technical assistance and greater visibility of investment opportunities. The third pillar aims at improving the business environment by removing regulatory barriers to investment EU wide.

The European Fund for Strategic Investments, also known as ‘the Juncker Fund’, aims at mobilising by 2020 EUR 500 billion ( 56 ) of additional public and private investment in strategic areas such as infrastructure, research and innovation, education, renewable energy and energy efficiency, environment as well as risk finance for small and medium-sized enterprises. This is achieved via an EU budgetary guarantee to the European Investment Bank Group, which allows them to increase the financing of projects with a higher-risk profile. The fund supports growth-enhancing investments, especially in the following areas: 

Chart: investment by sector as of 15 May 2019.

Source: European Investment Bank Group – http://www.eib.org/efsi/

Implementation and latest achievements

By the end of 2018, the European Fund for Strategic Investments had successfully supported innovative and strategic projects and had helped mobilise more than EUR 370 billion ( 57 ) of private and public investment. This already represents almost 75% of the target for 2020. 

In the infrastructure and innovation window, the European Investment Bank has approved 514 projects of around EUR 244.3 billion in investment value, with financing from the European Investment Bank guaranteed by the European Fund for Strategic Investments expected to amount to EUR 52.9 billion.

In the small and medium-sized enterprises window, 517 operations have been approved by the European Investment Fund for a total investment value of EUR 131.2 billion. About 858 000 small and mid-caps in all Member States are expected to benefit. Out of the 1 031 approved operations, 869 were signed in all Member States. The European Fund for Strategic Investments is well on track to deliver on its objectives.

The European Fund for Strategic Investments had an aggregate multiplier effect of 13.5 ( 58 ) of 2018, which means that every EUR 1 of the EU budget leverages EUR 14.96 of additional investment (calculation for the fund as a whole).

The European Fund for Strategic Investments has also played an important role in channelling investment towards the fulfilment of the EU’s strategic objectives. One third of the European Fund’s for Strategic Investments total investments support small and medium-sized enterprises; 25% research and development; 18% support energy projects; 11% digital projects; 7% transport projects; 4% social infrastructure and 4% environment and resource efficiency ( 59 ).

Providing new facilities for patients in Poland ( 60 ) 

Hospitals often lack funds to invest in improving their standard of health care. The Kujawsko-Pomorskie Region was the first in Poland to get a loan for a public-sector project under the European Fund for Strategic Investments. By combining a EUR 57-million European Investment Bank loan with money from its own budget and other EU financing, the region is extending Toruń’s Rydygier hospital. With a focus on research and modern technology, this project will provide residents with a full range of treatments and access to the latest medical procedures. The number of beds for patients will double, rising from 551 to 1 059. The floor space will increase from 20 000 m2 to more than 50 000 m2, and 57 000 m2 of green space will be created. The hospital will make savings by improved efficiency of the administration and by introducing environmentally friendly and energy-saving measures. The new parts of the hospital will open to patients in 2019.

Upgrading energy networks in Italy ( 61 )

The European Investment Bank is lending Dolomiti Energia EUR 100 million to renew and develop its gas and electricity distribution networks. The financing will strengthen and maintain hydroelectric plants in the province of Trento in northern Italy, where Dolomiti Energia operates and employs 1 400 people.

Connecting Europe Broadband Fund ( 62 ): broadband reaches less-populated areas of the EU ( 63 ) 

The Connecting Europe Broadband Fund is the first investment platform to invest in broadband infrastructure under the Juncker plan. The fund combines financing from the European Investment Bank, the Connecting Europe Facility, national promotional banks and private investors. The new broadband fund will help the EU meet the target that all European households should have access to internet connections of 30 Megabits per second by 2020 and that all schools, transport hubs, main providers of public services and digitally intensive enterprises should have access to internet connections of 1 Gigabit per second by 2025 (European Gigabit Society objectives). It responds to the growing demand of financing of smaller-scale, higher-risk broadband projects across Europe, which currently do not have access to EU funds. The fund aims to raise EUR 500 million for broadband investment by 2020 and is expected to unlock total investments of EUR 1.0-1.7 billion. The fund’s first project was signed in January 2019 to deploy high-quality fibre-to-the-home (FTTH), open-access network for residential, business and public administration in the rural areas of the Primorje-Gorski Kotar and Istria regions (Croatia) to cover over 135 000 locations.

Assessment and evaluation

Evidence from the 2018 evaluation suggests clear value added in terms of the European Fund for Strategic Investments responding to unmet investment needs and supporting the need for counter-cyclical investment. From a political perspective, the fund has managed to shift the debate from austerity to investment support measures. Based on operations up until the end of 2017, the European Fund for Strategic Investments has supported more than 750 000 jobs with the figure set to rise to 1.4 million jobs by 2020. It has increased gross domestic product in the EU by 0.6% and it is set to increase EU gross domestic product by 1.3% by 2020.

Although the overall picture has improved at a macro level, in terms of the scale of the financing gap and of the financing conditions (especially for small and medium-sized enterprises), there remain substantial and pressing investment needs. Evidence from the evaluation suggests that persistent market gaps holding back investment are still observed in different policy areas. The recent acceleration of investment in the EU has not yet managed to bring investment rates up to historical averages. Moreover, efforts will need to continue beyond 2020 to bring investment back to its long-term sustainable trend with particular focus on current and emerging EU policy priorities.

Among the shortcomings highlighted in the 2018 evaluation is the need to focus more on EU’s long-term climate goals. This is being addressed when the European Fund for Strategic Investments was extended in 2018. A minimum 40% of European Fund for Strategic Investments infrastructure and innovation window should contribute to climate action in line with the Paris Agreement. In addition, the Commission has used its representation in the governance bodies of the European Investment Bank and of the European Investment Fund and in steering committees for these instruments to ensure that the European Investment Bank and the European Investment Fund adhere closely to EU policy objectives in implementing financial instruments, including support for social entrepreneurship, the fight against youth unemployment, the fight against climate change, the fight against tax avoidance and the promotion of international tax good governance standards.

In the past, the European Fund for Strategic Investments supported only a limited number of cross-border projects which typically have a high EU value added dimension. Ensuring wide geographical coverage across the EU continues to be important, which is something that has improved over the years of the fund’s operation. In terms of consistence, there is still scope for further improving the complementarity and mutual support between the fund’s three pillars as well as mitigating potential risks of competition between the fund and other EU financial instruments.

In January 2019, the European Court of Auditors published a special report (No 03/2019) on the European Fund for Strategic Investments. Although the overall conclusion of the audit is that the fund has been effective in raising finance to support substantial additional investment in the EU, the Court also raised some concerns. These include whether some fund operations have replaced other European Investment Bank operations and EU financial instruments, and whether a part of the fund support went to projects that could have been financed from other sources, albeit on different terms. The Court also emphasised the continuing need to ensure a balanced geographic spread of fund-supported investment.

Under the multiannual financial framework package and building on the success of the Juncker plan and the European Fund for Strategic Investments, the Commission has proposed a new initiative to mobilise private and public investment for the 2021-2027 period — the InvestEU programme. The new programme has introduced changes tackling issues raised by the European Court of Auditors in order to make EU funding for investment projects in Europe simpler, more efficient and more flexible. The InvestEU programme is to focus on addressing the large investment gaps in key areas of the future through an EU budget guarantee of EUR 38 billion. It will thus further boost job creation and support investment and innovation in the EU. It is expected to mobilise around EUR 650 billion of private and public investment across the EU by end-2027 and provide support through four policy windows: sustainable infrastructure, research, innovation and digitisation, small and medium-sized enterprises (SMEs), and social investment and skills.

Connecting Europe Facility

Programme objectives

In order to stimulate job creation and boost growth rates, the EU needs an up-to-date, high-performance infrastructure to help connect and integrate the EU and all its regions in the transport, telecommunications and energy sectors. Such connections are essential for the free movement of persons, goods, capital and services.

The Connecting Europe Facility therefore supports investment in transport, energy and digital infrastructure through the development of trans-European networks. These networks facilitate cross-border connections and interoperability, foster greater economic, social and territorial cohesion and contribute to a more competitive social market economy.

The specific objectives of the Connecting Europe Facility are the following:

Implementation and latest achievements

The Connecting Europe Facility provides support for the development of the Trans-European Transport Network completing cross-border connections, bridging missing links and removing bottlenecks. Between 2014 and 2018, 688 projects were selected for funding under the transport strand of the Connecting Europe Facility, providing EUR 22.8 billion EU funds leveraging an investment volume of EUR 48 billion. In 2018, the Connecting Europe Facility provided EUR 1.7 billion funds leveraging an overall investment of almost EUR 7 billion for 88 transport projects focusing on Trans-European Networks (TEN). In addition, a specific call was launched to mobilise funds in favour of transport safety, digitalisation and multimodality with EUR 450 million funds available.

The telecommunications strand of the Connecting Europe Facility enables the interoperability by deploying an ecosystem of trusted cross-border digital service infrastructures that are essential to trigger the digital transformation of the Member States. In terms of connectivity the Connecting Europe Facility stimulates investemnt for deploying and modernising broadband networks, and provides high-quality local wireless connectivity in local communitites (Wifi4EU). Digital service infrastructures facilitate cross-border interaction between public administrations, businesses and citisens in a wide range of areas such as cybersecurity, open data and e-health.The work programme for 2018 supported the deployment, operation and evolutive maintenance of 16 digital infrastructures, building on the investment made in previous years. In addition, three new building blocks were added to the Connecting Europe Facility ecosystem, namely eArchiving, the Context Broker, and big data Test Infrastructure ( 64 ).

The e-Identification building block addresses the challenge of cross-border recognition of nationally issued electronic identification documents. Once this is deployed in a Member State, the mutual recognition of such national identification documents becomes possible between participating Member States. This means that, for example, an EU citizen will be able to access a public service of another Member State using his or her own national means of identification. In 2018, the Connecting Europe Facility is financing an ambitious project laying the groundwork for the actual use of electronic identification documents in the Netherlands, enabling EU citizens to prove their identity electronically with their nationally issued documents when seeking access to more than 200 public services in 90 municipalities. The solution is currently available for Austrian, German and Belgian electronic identification documents holders and should progressively be extended to other countries ( 65 ).

2018 saw the completion of the 2017 Connecting Europe Facility transport blending call that took an innovative approach, making available a total indicative budget of EUR 1.40 billion of EU grants, to be combined with financing from the European Fund for Strategic Investments, the European Investment Bank, national promotional banks or private-sector investors. Over EUR 250 million of co-funding will be dedicated to promoting alternative fuels in transport. These projects include:

·greening the maritime transport link between the Swinoujscie port in Poland and the Ystad port in Sweden;

·deploying hydrogen public transport infrastructure in Denmark, Latvia and the United Kingdom;

·building a network of bio-liquefied natural gas stations on roads connecting southern Spain and eastern Poland via Belgium, Germany, France and the Netherlands;

·electrifying urban and regional bus routes in Croatia, Italy, Slovenia and Slovakia ( 66 ).

Under the blending call, the project for Zero Emission service network for public transport connecting Amsterdam and Schiphol Amsterdam Airport was selected. This will contribute to increase multi-modality and shifting consequently from fossil to alternative fuels in the Urban Nodes of the Trans-European Transport Network around Amsterdam (North Sea - Baltic, North Sea - Mediterranean and Rhine — Alpine).

The multiannual work programmes for the energy strand of the Connecting Europe Facility between 2014 and 2018 have led to a total of EUR 3.4 billion allocated to 122 actions contributing to 91 projects of common interest ( 67 ).

In 2018 the award for SuedOstLink was signed, one of the largest German energy infrastructure projects. The project consists of 580 kilometres of high-voltage cables laid fully underground. The power line will create an urgently needed link between the wind power generated in the north of Germany and the consumption centres in the south of the country. It will thus ensure better integration of renewable energies as well as enhance the cross-border exchange of energy with neighbouring EU Member States.

A grant of EUR 27 million has also been allocated to support the construction of a new 400 kV internal power line between Cernavoda and Stalpu in Romania, which will contribute to increasing the interconnection capacity between Bulgaria and Romania and help integrate wind power from the Black Sea coast.

Moreover, a grant agreement was signed to support the introduction of natural gas in Cyprus through the CyprusGas2EU project (EU support of EUR 101 million), which will end the current energy isolation of Cyprus, bringing diversification to a region mostly dominated by one single source of supply and helping to reduce air pollution and emissions by making it possible to switch from heavy fuel oil to gas for power generation. It will also improve energy security and price competitiveness ( 68 ).

The WiFi4EU initiative was announced by President Juncker in 2016 as part of the digital single market strategy, a framework including new measures to meet Europeans' growing connectivity needs and boost Europe's competitiveness. The WiFi4EU initiative aims to provide high-quality internet access across the EU to citizens and visitors via free-of-charge Wi-Fi hotspots in public spaces such as parks, squares, administrations, libraries and health centres. Vouchers worth EUR 15 000 each funded by the European Commission will be awarded to support close to 9 000 municipalities across the EU, Norway and Iceland for the installation of the Wi-Fi hot spots in these centres of public life, using the services of Wi-Fi installation companies ( 69 ).

The first WiFi4EU call for applications took place in November 2018, with over 13 000 municipalities applying from all across Europe and 2 800 vouchers awarded ( 70 ).

Assessment and evaluation

The evaluation of the Connecting Europe Facility ( 71 ) found that bringing together transport, energy and telecommunications under a common funding framework has allowed for economies of scale at programme level, with a single executive agency and common procedures. At project level, however, the Connecting Europe Facility did not sufficiently succeed in bringing the expected synergies.

The findings of the evaluation have fed into the proposal for the next Connecting Europe Facility by adding particular emphasis on simplification, enhanced flexibility and better monitoring of performance ( 72 ).

The future challenges for the EU economy linked to the goals of decarbonisation and digitalisation will imply a growing convergence of the transport, energy and digital sectors. Examples of synergy areas include connected and autonomous mobility, clean mobility based on alternative fuels, energy storage and smart grids. The proposal for the Connecting Europe Facility after 2020 ( 73 ) seeks to increase these synergies: in order to promote projects encompassing more than one sector, incentives will include the possibility to apply the highest co-funding rate of the sectors concerned. In addition, it will be possible for each sector to accept ancillary elements pertaining to another sector as eligible costs, for instance renewable-energy generation within a transport project. In order to incentivise and prioritise cross-sectoral proposals, the synergy dimension of a proposed action will be assessed under the award criteria. Synergies will be implemented through joint work programmes and joint financing involving the three sectors. It is foreseen that certain activities currently undertaken under the Connecting Europe Facility for telecom will be taken forward in the context of the new digital Europe programme.

Competitiveness of Enterprises and small and medium-sized enterprises

Programme objectives

The Programme for the Competitiveness of Enterprises and small and medium-sized enterprises encompasses actions to support small businesses via grants, financial instruments and support services.

Source: European Commission

The programme is improving access to finance for small and medium-sized enterprises through two financial instruments, the loan-guarantee facility and the equity facility for growth. Both instruments are managed by the European Investment Fund and facilitate access to loans and equity finance for riskier small businesses, which otherwise would not have been able to get the financing they need.

Implementation and latest achievements

Since 2015 and as part of the investment plan for Europe, funding opportunities under the loan-guarantee facility have been enhanced with the support of the European Fund for Strategic Investments. The initial front-loading was converted in 2017 into a permanent top-up of the loan-guarantee facility budget by EUR 550 million from the European Fund for Strategic Investments. This enabled making available in 2018 much more financing to riskier, smaller companies, including start-ups, which find it hardest to access finance due to their perceived higher risk or lack of sufficient collateral. Throughout the course of 2018, the European Investment Fund signed 36 agreements for loan guarantees for a total volume of EUR 387 million, out of which 33 agreements were jointly backed by the European Fund for Strategic Investments and the loan-guarantee facility ( 74 ). These agreements, together with those signed in the previous years, allowed more than 381 000 small businesses to receive over EUR 20 billion of financial support by the end of September 2018.

Signing agreements for the equity facility for growth took longer, as equity entails more complex due diligence and fundraising processes. At the end of 2018 the European Investment Fund had invested in 14 funds through the equity facility for growth for a total amount of EUR 163.5 million ( 75 ). Of these, five were multi-stage funds combined with the InnovFin Equity Facility for Early Stage ( 76 ) set up under Horizon 2020.

The Enterprise Europe Network helps small European companies to internationalise through advisory services and by finding business, technology and innovation partners abroad. The network services are available to smaller businesses in the EU and countries associated with the programme through 607 intermediary organisations. In 2018 the network services helped an estimated 250 000 small and medium-sized enterprises develop their business outside their home country and facilitated around 75 000 business cooperation meetings between small businesses, resulting in 2 611 international partnership agreements signed between them ( 77 ). The renewed network advisory support services helped 1 796 small and medium-sized enterprises improve their competitiveness and innovation in 2018. Enterprise Europe Network scale-up advisers were put in place, as set out in the Commission’s start-up and scale-up initiative ( 78 ) with the implementation of a specific action covering 56 EU regions, helping scale-ups overcome the barriers to growth. A new strategic vision for the Enterprise Europe Network has been prepared to ensure it continues delivering services that address small company’s future needs.

Small businesses value the network and its support: 89% of small and medium-sized enterprises expect their market situation to improve thanks to this support. Moreover, close to one in two feels its competitiveness will improve thanks to improvements in innovation achieved with network help. Nearly 6 out of 10 estimated that network services will help them preserve or create jobs.

Erasmus for Young Entrepreneurs holds annual calls for proposals. In 2018, Erasmus for Young Entrepreneurs had already reached the level of 7 000 exchanges between new and experienced entrepreneurs across Europe since the start of the programme ( 79 ). In order to test the geographical extension of Erasmus for Young Entrepreneurs to new destinations outside Europe, the implementation of the 24-month Erasmus for Young Entrepreneurs Global pilot project started in April 2018.

The programme for the competitiveness of enterprises and small and medium-sized enterprises also contributes to improving the framework conditions for the competitiveness of EU enterprises in a number of ways. In the context of the ‘cluster go’ international initiative, the programme enabled the establishment of 25 EU cluster partnerships in 2018, supporting 134 clusters in Europe to go international for the benefit of their small and medium-sized enterprises ( 80 ). This initiative encourages participating clusters and small companies to access global value chains and find strategic partners beyond Europe. Nine European strategic cluster partnerships for smart specialisation and investments were set up in 2018. These partnerships gather 57 clusters across Europe and reach out to over 6 000 small and medium-sized enterprises.

The European cluster collaboration platform ( 81 ) has developed into a leading hub for facilitating cluster collaboration at EU and global level. It gathers more than 930 cluster organisations, reaching out to about 100 000 small businesses. With the facilitation of over 1 100 international matchmaking meetings between clusters in 2018 where the European cluster collaboration platform took part, it has become a key EU instrument in supporting the internationalisation of such enterprises. 

Assessment and evaluation

A study evaluating the Programme for the Competitiveness of Enterprises and small and medium-sized enterprises ( 82 ) found a strong alignment of the programme with the evolving needs of small enterprises in Europe and a high relevance for the public, thanks to focus on fostering employment opportunities and growth creation. The EU dimension is at the core of the programme and is critical for most actions. The programme has successfully set the building blocks for attaining the expected results. The strength of the programme lies in the use of intermediary organisations (financial intermediaries, Enterprise Europe Network members, intermediary organisations for Erasmus for Young Entrepreneurs and cluster organisations). The programme uses the proximity of these local intermediaries to small enterprises and facilitates the integration of the programme services with services provided by these national and regional intermediaries. The feedback from beneficiaries is generally positive with a substantial majority reporting a good cost-benefit ratio of their participation. The European dimension is the added value of the programme.

The study made proposals to improve shortcomings in the performance of the programme: the fragmentation of the budget into many small actions should be reduced to improve efficiency and cost-effectiveness; and availability of monitoring data should be provided centrally to strategically guide implementation. There are no major overlaps of the programme activities with other policy initiatives, both at EU and national and regional levels. However, for some actions, synergies and complementarity with other EU, national and regional actions could be improved.

The study was used for the preparation of the proposals of successor programmes for the post-2020 multiannual financial framework. The Programme for the Competitiveness of Enterprises and small and medium-sized enterprises (except for the financial instruments) will be integrated into a new programme called the single market programme ( 83 ). The new programme will support specific types of actions in the areas of improved competitiveness, notably of small and medium-sized enterprises, standardisation, consumer protection, anti-money laundering, competition, financial reporting and auditing, veterinary and phytosanitary measures along the food chain and European statistics. The financial instruments from the programme will be integrated into a new fund called InvestEU, bringing EU financing in the form of debt and equity under one roof.

ERASMUS+

Programme objectives

Erasmus+ is the EU’s flagship programme to support and strengthen education, training, youth and sport in Europe. For three decades, Erasmus+ and its predecessors have been offering mobility opportunities to young people, students vocational education and training learners and adults to study, train, gain experience and volunteer abroad, in Europe or beyond. The Erasmus+ programme plays an important role in supporting cooperation between universities, schools, vocational-training providers, youth and sport organisations , as well as learning opportunities for future teachers and professional development for teachers and school leaders. The programme fosters the mobility of learners and staff in vocational education and training, as well as staff in the adult education sector, while also supporting internationalisation through strategic partnerships taking forward the priorities set in the vocational education and training Riga Conclusions and the European agenda for adult learning.

Implementation and latest achievements

In 2018 emphasis was put, across all actions of the programme, on activities that support social inclusion and equity in education, training, youth and sport — in line with the Paris Declaration on promoting citizenship and the common values of freedom, tolerance and non-discrimination through education, and with the Commission’s action plan on the integration of third-country nationals.

In 2018, ERASMUS+ demonstrated its flexibility in addressing specific policy priorities through different actions.

In the field of higher education, in 2018 priority was given to enhancing the quality and relevance of students’ knowledge and skills, better use of information and communications technology (ICT), improving the inclusiveness of higher education systems, and better links between higher-education institutions and employers or social enterprises. More than 320 000 higher-education student mobilities took place in 2018.

In the field of school education, priority was given to strengthening the profiles of the teaching professions, promoting the acquisition of key competences, e.g. by addressing underachievement in the basic skills of mathematics, science and literacy and supporting multilingual classrooms. Access to the Erasmus+ programme for schools was facilitated in 2018 by introducing a new form of school exchange partnerships into the programme. As a result, the number of awarded projects in the sector increased by 40%. Teachers can also join the eTwinning community do collaborative projects with classes in other countries to follow online and face to face professional development opprotunities, and get recognition for their work. Since its inception in 2005, eTwinning has 640 000 users and 218 000 schools. In 2018, 103 000 new users registered and 14 000 projects were launched.

As regards vocational education and training, Erasmus+ supports the development of business-education partnerships aimed at promoting work-based learning in all its forms, with special attention to apprenticeship, as well as the development of joint qualifications and curricula responding to current and future sectoral skills needs. Long-term mobility (between 3 months and 12 months) of eligible participants has been promoted by introducing the ErasmusPro ( 84 ) activity into the Erasmus+ programme as of 2018. Consequently, such mobility increased by more than 60% (average of 8 000 per year in the period 2014-2017, and almost 13 000 in 2018).

Concerning social inclusion and equity, the Erasmus+ supports actions aimed at preventing violent radicalisation and promoting democratic values, fundamental rights, intercultural understanding and active citizenship; fostering the inclusion of disadvantaged learners, including persons with a migrant background, while preventing and combating discriminatory practices. The sport strand has continued to support initiatives to tackle cross-border threats to the integrity of sport, such as doping, match fixing and violence, as well as all kinds of intolerance and discrimination. It has promoted good governance in sport and dual careers of athletes and voluntary activities in sport, together with social inclusion, including refugees and migrants.

Furthermore, in the field of adult education, priority was given in 2018 to improving and extending the supply of high-quality learning opportunities tailored to the needs of individual low-skilled or low-qualified adults so that they acquire literacy, numeracy or digital skills, including through the validation of skills acquired through informal and non-formal learning. Extending and developing educators’ competence is also stressed as a priority for this sector.

Adult learning: the Electronic Platform for Adult Learning in Europe, with more than 47 000 registered users (plus 38% within 1 year), showed a significant increase in users in 2018. This platform is a multilingual, open membership community of adult-learning professionals, including adult educators and trainers, guidance and support staff, researchers and academics, and policymakers.

With regard to the international dimension, Erasmus+ continued to provide mobility opportunities for higher-education staff, students, young people and youth workers between Europe and the rest of the world, with a particular emphasis on supporting further development of the European Neighbourhood region (Western Balkans, Eastern Partnership ( 85 ) and southern Mediterranean). On 18 January 2018 the Commission adopted the digital education action plan ( 86 ), which covers the areas of formal education with specific actions for school, vocational education and training, and higher education. The plan identifies three priorities to ensure that digital technologies are used purposefully to innovate and improve teaching and learning. The 11 actions of the plan include supporting high-capacity broadband in all schools, creating a Europe-wide platform for digital higher education and enhanced cooperation, and providing training schemes on digital and entrepreneurial skills and on raising awareness about online safety .

The Erasmus+ mobile app continued to serve as a digital one-stop shop that guides participants and interested young people to find everything they need to know about opportunities to go abroad with Erasmus+. The application provides information, tips, notifications and other services to help make organising their periods of mobility easier. The app was downloaded and installed almost 30 000 times during 2018, bringing the total number of downloads since its launch (mid-2017) to more than 55 000. Discussions also began on how to improve and broaden the range of online services for students undertaking a period of cross-border learning mobility, including potentially enhancing the app as part of a larger online single point of entry for services for mobile students.

The role models initiative ( 87 ), a network of positive role models supporting the prevention of radicalisation leading to violent extremism, is further rolled out by the participating Erasmus+ national agencies. With the first piloting activities started in 2017, the initiative took a broader dimension throughout the course of 2018 (e.g. the successful launch event of the role models initiative in Italy in March 2018). In addition to this initiative carried out by the Erasmus+ national agencies, the Commission is promoting the role models approach through an Erasmus+ social-inclusion call for proposals.

The creativity and critical thinking in higher education initiative, launched at the beginning of 2018, aims to internationally prototype and test an assessment tool to help faculties develop and assess the creative and critical-thinking skills of their students. Through Erasmus+ the Commission is financing the first phase of this project, which consists in involving higher-education staff in operationalising creativity and critical thinking and collecting examples of pedagogical tasks and student work to exemplify how students can demonstrate these skills in different settings.

Assessment and evaluation

The midterm evaluation of the 2014-2020 Erasmus+ programme ( 88 ), which assessed the progress in the implementation of the programme and the long-term impact of its predecessor programmes, showed that the current Erasmus+ delivers a unique package of outcomes in the field of education, training, youth and sport and is highly valued by stakeholders and the public. It highlighted the strong European added value of Erasmus+ and its predecessor programmes. Moreover, it highlighted the positive effects of the integrated nature of the programme covering learning in all its contexts.

The evaluation indicated some areas for improvement, in particular: in terms of relevance, the evaluation pointed to the need for Erasmus+ to better reach out to those individuals who have fewer opportunities, to facilitate the participation of smaller organisations to make the programme more inclusive and to reinforce measures to foster the understanding of European integration and sense of belonging to Europe, in particular amongst the youngest generations; in terms of effectiveness, Erasmus+ should reinforce the volume of activities in sectors showing the highest performance but which have, until now, received relatively less funding, such as in the school, vocational education and training and youth sectors, which will also contribute to reinforcing the inclusion dimension of the programme; and in terms of efficiency, Erasmus+ should further simplify the procedures of application and reporting in order to reduce the administrative burden on beneficiaries, and should further optimise its online procedures.

The Court of Auditors, in its special report ( 89 ) on mobility under Erasmus+, also concluded that this programme is a well-known, successful EU brand. Erasmus+ plays a key role in building up learning mobility abroad and has a positive effect on participants’ attitudes towards the EU. The Court identified the innovative student loan guarantee facility as an area for improvement and also recommended better coverage of the programme objectives by indicators.

These suggestions for improvement were considered by the Commission in the proposed successor programme Erasmus: the EU programme for education, training, youth and sport ( 90 ) in the context of the multiannual financial framework 2021-2027. The new programme will focus in particular on stepping up mobility and exchanges for all categories of learners, increasing efforts to reach out to learners who have fewer opportunities and increasing opportunities to cooperate, including for smaller organisations. The new programme will seek to rationalise and refocus certain existing actions. For example, some actions will be specifically targeted towards activities that foster the development of competences in forward-looking fields; others will be aimed at fostering innovation in education, training, youth and sport; Jean Monnet activities will be partially refocused to target broader groups of learners; the actions in the adult-learning sector will be reinforced. At the same time, the proposed programme reinforces the inclusive dimension of the programme by adapting certain existing actions and introducing new measures (such as short-term, group-mobility and virtual cooperation). 

European Solidarity Corps

Programme objectives

President Juncker announced the European Solidarity Corps in his 2016 State of the Union speech. The European Solidarity Corps offers young people between the ages of 18 and 30 the opportunity to take part in a wide range of solidarity activities across the EU, with the aim of creating 100 000 opportunities by the end of 2020. From December 2016 and until the adoption of the European Solidarity Corps regulation ( 91 ), eight different programmes were mobilised to give young people the chance to take part in a range of solidarity activities addressing challenging situations across the EU. Participation not only benefits young people’s personal development, active involvement in society and employability, but it also assists non-governmental organisations, public bodies and companies in their efforts to cope with societal and other challenges. As well as offering volunteering, traineeships and jobs, the European Solidarity Corps also offers participants the opportunity to set up their own solidarity projects or to volunteer as a group.

The European Solidarity Corps aims to strengthen the engagement of young people and organisations in solidarity activities. The corps is a means to help strengthen cohesion, solidarity and democracy in Europe and abroad and to address societal and humanitarian challenges on the ground, with particular focus on promoting social inclusion.

Implementation and latest achievements

Since December 2016, the Commission has been focused on the design and development of the European Solidarity Corps as well as promotion and outreach to potential participants.

Several key milestones were reached by the end of 2018, including the following:

·The regulation ( 92 ) establishing the European Solidarity Corps was adopted, providing the corps with its own legal basis, facilitating the implementation of the programme and providing a self-standing budget.

·The first call for proposals of the corps in 2018 was a success, with over 1 400 submissions received by organisations that host or support the solidarity activities. Out of these submissions, 255 proposals came from groups of young people registered in the corps portal to implement solidarity projects. In total, the proposed activities could offer up to 13 000 opportunities for young people.

·At year-end 2018, since the beginning of the programme, over 10 000 young people had already started their activities and the number of young people registered on the portal ( 93 ) had passed 96 000, showing the high demand that will likely help fill all the opportunities offered by the programme.

Assessment and evaluation

The ex ante evaluation of the corps ( 94 ) indicated a need for the EU to address these challenges under an extended European Solidarity Corps. In particular, given the initial confusion among potential participants about the role of the corps, concerning the underlying programmes and the differences from and consistency with the EU aid volunteers initiative.

For the next EU budget 2021-2027, the Commission presented its proposal for a new programme for the European Solidarity Corps ( 95 ), aiming to broaden the opportunities it offers. The new programme will create at least 350 000 opportunities for young people to support communities in need between 2021 and 2027 through volunteering, traineeships and job placements. That is why the Commission proposed to reserve EUR 1.3 billion over seven years under the next long-term EU budget.

The proposal builds on the achievements of the corps in its first years of existence and further consolidates efforts to have one single-entry point for young people ready to engage in solidarity. In particular, the corps will also include volunteering activities in support of humanitarian-aid activities and operations in non-EU countries. This well-established EU scheme for humanitarian aid has so far operated under the name ‘EU aid volunteers’.

Employment and social innovation (EaSI)

Programme objectives

The employment and social innovation programme promotes high-quality and sustainable employment, guaranteeing appropriate and decent social protection, combating social exclusion and poverty, and improving working conditions. It is built on three axes: support for the modernisation of employment and social policies (Progress), job mobility (European employment services: EURES), and access to microfinance and social entrepreneurship.

The programme aims to achieve the following specific objectives:

In order to contribute to the achievements of:

Implementation and latest achievements ( 96 ) 

In 2018, the programme financed 39 projects through seven calls for proposals with a budget of EUR 33 million. It supported studies and actions on labour mobility, the electronic exchange of social-security information projects, enhanced cooperation between European public employment services and other organisations through the EURES network, and the deployment of targeted mobility schemes (‘Your first EURES job’). In addition, the implementation of the employment and social innovation guarantee continued and, by the end of 2018, 76 microfinance and 25 social entrepreneurship operations had been signed in 29 countries for a total of EUR 179 million. These operations are expected to unlock more than EUR 2 billion of financing for micro- and social enterprises.

(a) Under the Progress axis, there was further development in 2018 of experiences of administrative cooperation to another EU Member State as well as of fostering administrative cooperation between inspection authorities and social partners in the area of posting of workers.

The ‘EU Post lab’ project focused on the construction sectors of Austria, Belgium, Bulgaria, Germany, Italy, Poland, Portugal, Romania, Spain and Turkey. The project identified how cooperation between inspection authorities and social partners can produce relevant data and information, which can be properly registered and shared at national and transnational level with a view to reducing the administrative burden on employers while improving the protection of workers’ rights.

Under social innovation, the support focused on access to social protection, but also innovative work-life balance strategies to facilitate reconciliation of professional and caring responsibilities.

(b) Under the EURES axis, due to the improved labour-market context in Member States, the use of the EURES job mobility portal has decreased since 2017 but still remains important (0.9 million visits every month in 2018). In 2017, there were 8 512 job placements following consultations with jobseekers as a result of the preparatory action ‘Your first EURES job’ and targeted mobility schemes (and an additional 1 204 placements in the first 6 months of 2018). According to the latest data provided by the EU single market scoreboard, on average, the amount of national vacancies shared on EURES in 2017 was 59%.

‘Your first EURES job’ is an EU job mobility scheme helping young people between 18 and 35 to find a job, traineeship or apprenticeship opportunity in another EU country, Norway, Iceland, Lichtenstein or Switzerland and to help employers find qualified workforce. It aims to match young jobseekers with offers of paid work across Europe.

(c) Under the microfinance and social entrepreneurship axis, by the end of 2018, 101 operations (76 for microfinance and 25 for social entrepreneurship) had been signed in 29 countries for a total amount of EUR 178.6 million (EUR 129.2 million for microfinance and EUR 49.4 million for social entrepreneurship). By late 2016 the budget of EUR 56 million for microfinance of the initial EU programme for employment and social innovation had been fully absorbed. This consequently led to a EUR 100 million top-up from the European Fund for Strategic Investments in December 2017, which was further increased by an additional top-up of EUR 200 million from the European Fund for Strategic Investments 2.0 in December 2018. In light of this, the initial total EU budget earmarked for the EU programme for employment and social innovation guarantee instrument over 2014-2020 has increased from EUR 96 million to EUR 396 million for both microfinance and social entrepreneurship. The transactions by the European Investment Fund at the end of December 2018 suggest an expected leverage effect of EU contribution between 5.5 and 30.4, with an estimated average leverage value of 12. This leverage effect is more than twice the minimum leverage effect set in the delegation agreement and suggests important gains in terms of effectiveness (improved results compared to those initially envisaged) and in terms of efficiency gains (higher leverage effect and more efficient use of EU contribution).

Assessment and evaluation ( 97 )

The findings of the midterm evaluation confirm that the general and specific objectives of the EU programme for employment and social innovation continue to be relevant, in particular in light of the current challenging socioeconomic context characterised by the aftermath of the financial and economic crisis.

The programme has achieved good-quality outcomes, yet on a small scale given its limited resources. For instance, the scaling-up of projects is hindered by the lack of an appropriate follow-up to ensure their long-term sustainability.

Even though the three axes (progress, EURES and microfinance and social-entremreneurship) seem to operate independently, some areas which could result in increased effectiveness (‘synergies’) have been identified. For example, synergies between the different progress projects could be mentioned but also between projects related to progress and the microfinance/social entrepreneurship axes.

The midterm evaluation highlighted a number of ways to improve the implementation of the employment and social innovation programme, especially through enhanced flexibility and through targeting groups in need of specific support, the simplification of procedures, improved internal consistence and linkages with other funds.

For this purpose, in the Commission’s proposal for the next multiannual financial framework, the current programme for employment and social innovation is integrated into the European Social Fund+, in order to address the fragmentation of funds and limited potential to upscale. Also the financial instruments currently funded under the third axis will be merged under the future InvestEU programme, including an enhanced ‘social window’.

Space (Copernicus, Galileo and the European Geostationary Navigation Overlay Service)

Objectives

EU space policy supports many other policies and strategic priorities of the EU. For instance, it plays a crucial role in effectively tackling the challenges posed by climate change, sustainable development, border control, maritime surveillance and the security of citizens.

Copernicus is the European system for monitoring the Earth. It offers six free-of-charge services to EU, national and regional institutions, as well as to the private sector, namely: the monitoring of the atmosphere, the marine environment, land and climate change in addition to emergency management and security ( 98 ). Copernicus provides information based on a system of satellites and in situ ( 99 ) infrastructure. The information provided by Copernicus can be used for a wide range of applications in a variety of areas, including urban-area management, sustainable development and environmental protection, regional and local planning, agriculture, forestry and fisheries, health, civil-protection, infrastructure, transport and mobility, as well as tourism. For instance, the Copernicus service for climate change provides information about the past, present and future climate, as well as tools to enable climate-change mitigation and adaptation strategies by policy makers and businesses.

Galileo is the EU’s own global navigation satellite system, providing secure positioning, navigation and timing services. Galileo is used in used in mobile phones and car navigation as well as in critical applications such as the synchronisation of electricity grids or telecommunication networks.

The European Geostationary Navigation Overlay Service (also known as EGNOS) is a regional satellite navigation system ( 100 ). The system provides safety of life navigation services to aviation, maritime and land-based users in Europe. More than 80% of European farmers using satellite navigation for tractor guidance related to spraying and harvesting of crops rely on it.

The EU Space sector at a glance

Space technology, data and services have become indispensable in people’s lives and play an essential strategic role for Europe. Europe has a world-leading space industry.

EU space data is transforming our lives with services such as:

Implementation and latest achievements

The overall implementation of the Copernicus programme is in line with the expected progress, with seven satellites in orbit and in operation, enabling the operation of the six Copernicus services. The latest satellite launch was that of Sentinel 3B in April 2018.

The Copernicus Climate Change Service has moved to its operational phase in summer 2018. It has become an important and recognised climate information resource for international bodies. The Copernicus Emergency Management Service was activated over 86 times to assist authorities in relation to disasters, such as wildfires, storms, floods and volcanic eruptions, earthquakes, ground subsidence ( 101 ).

The data and information access services were launched in June 2018 allowing better uptake of Copernicus data, bringing the number of registered users to more than 200 000. In addition, more cooperation agreements have been signed with non-EU (‘third’) countries and organisations including the African Union, Brazil, Chile, Columbia, India, Serbia, Ukraine and to promote the uptake of Copernicus globally ( 102 ).

Galileo is operational since 2016 and has since been providing services continously. In parallel, the deployment of the Galileo space infrastructure is ongoing. Four satellites were successfully launched in July 2018 bringing the total number of satellites in space to 26. To ensure the independent monitoring of Galileo services, the Galileo Reference Centre started to operate in Noordwijk (the Netherlands). The Commercial Service High Accuracy (so-called High Accuracy Service) will offer a 20 cm positioning accuracy and will be provided for free of charge ( 103 ). This level of accuracy is crucial for the development of emerging technologies such as automated connected cars. The market uptake of Galileo and of the European Geostationary Navigation Overlay Service boomed in 2018 with more than 500 million Galileo-enabled devices on the market as per 31 December 2018. Innovation is continuing, mid May 2019 already 714 million deviced were Galileo-enabled.

Importantly, in November 2018 Galileo became the first non-United States global satellite navigation system to be allowed in the United States. The use of the EU’s Galileo in combination with the United States global positioning system (GPS) will open the United States market for Galileo and improve the United States consumer experience through improved availability, reliability and resiliency of these position, navigation, and timing services.

Galileo is helping to save lives. Galileo’s search-and-rescue service drastically reduces the time needed to detect emergency distress beacons from up to 3 hours to just 10 minutes. As the location of the distress beacon locations is determined more accurately, people lost at sea or in the mountains can be rescued more quickly ( 104 ).

Assessment and evaluation

The Copernicus midterm evaluation confirmed that the programme is delivering on its objectives. However, while the data collected is of good quality, the evaluation showed the need to improve the distribution and access to data with the aim of increasing user uptake ( 105 ). The launch of the data and information access services in June 2018 as well as the extension of various activities to maximise the use of Copernicus applications (including through the signing of international cooperation agreements) are aimed at addressing the challenges of access to data and user uptake .

Galileo and the European Geostationary Navigation Overlay Services are progressing well in delivering on their objectives according to the midterm evaluation ( 106 ). However, the evaluation identified some inefficiency issues linked to governance, given the number of actors involved and because of differences in governance structures and work organisation between deployment and exploitation. The evaluation also identified inefficiency linked to security governance.

The proposal for a regulation of the EU space programme for the post-2020 multiannual financial framework aims to address these governance concerns ( 107 ) by clarifying the relations between the various stakeholders and the role of each one (i.e. mainly the Member States, the Commission and the European Space Agency (ESA)), and by establishing a unified system of governance for all the components of this programme). The legislation enhances the role of the former European Global Navigation Satellite System (GNSS) agency by expanding the scope of its tasks as regards security accreditation to include all the components of the EU space programme and market update activities. The new regulation also specifies and standardises the security framework for the EU space programme.

European Defence Industrial Development Programme

Programme objectives

In a world of increasing instability and cross-border threats to our security, no country can succeed alone. That is why the Juncker Commission is making an unprecedented effort to protect and defend Europeans. The European Union cannot substitute Member States’ efforts in defence, but it can encourage their collaboration in developing and acquiring the technologies and equipment needed to address common security and defence challenges.

On 18 July 2018 the European Defence Industrial Development Programme was adopted under the EU budget for 2019 and 2020. It supports the competitiveness and innovative capacity of the EU defence industry, specifically in the development of prototypes, defence equipment and technology through co-financing from the EU budget. The programme is implemented directly by the Commission.

The European Defence Industrial Development Programme helps creating a collaborative approach between the defence industries in the Member States. The financial contribution of the EU unlocks development projects that otherwise would not have happened due to high financing needs or technological risks involved. The programme is an enabling factor leading to additional collaborative capability development projects in key defence areas.

Member States may, for example, jointly invest in developing drone technology or satellite communication, or they may bulk buy helicopters to reduce costs. Only collaborative projects will be eligible, and a proportion of the overall budget will be earmarked for projects involving cross-border participation of small and medium-sized enterprises.

European cooperation in matters of defence makes economic sense. There is a strong case for the European added value of a European Defence Fund.

·Lack of cooperation between Member States in the field of defence is estimated to cost between EUR 25 billion and EUR 100 billion every year.

·EUR 600 million per year could be saved if European armies shared infantry vehicles and EUR 500 million per year if they had one certification system for ammunition.

·There are 178 types of weapon systems in Europe, 30 in the United States.

·Thereare 20 different types of fighter planes in Europe, 6 in the United States.

·There are 17 different battle tank systems in Europe, 1 in the United States.

·In Europe, there are more types of helicopters than governments to buy them.

Source: NATO, International Institute for Strategic Studies, SIPRI, Munich Security Report 2017.

Assessment and evaluation

Defence-research cooperation is already materialising. The first EU grant agreements under the 2017 budget included the research project Ocean2020, which brought together 42 partners from 15 EU Member States and supports surveillance missions at sea and to that end will integrate drones and unmanned submarines into fleet operations.

An ex ante evaluation ( 108 ) accompanying the proposal of the European Defence Industrial Development Programme concluded that the European defence industry faces significant challenges linked to low investment in capability development projects, fragmentation and a lack of cooperation. The ex ante evaluation highlighted the need for an EU initiative supporting the competitiveness and innovation capacity of the European defence technological and industrial base. This will strengthen European strategic autonomy and reduce dependencies for key defence capabilities. It showed that cooperation is an effective way to achieve this, since it is likely that in the long run no single European Member State can afford to maintain a full spectrum defence industry base and corresponding defence capabilities on its own. The EU can make a substantive contribution. The European Defence Industrial Development Programme will bring significant value added by incentivising collaboration and unlocking additional capability development projects.

Building on the current programmes, namely the European Defence Industrial Development Programme and the Preparatory Action on Defence Research, the Commission proposed in June 2018 a fully-fledged European Defence Fund worth EUR 13 billion under the next EU long-term budget to cover both the research and capability development strands. The fund will support competitive and collaborative defence projects throughout the entire cycle of research and development for a bigger impact. The EU will directly finance total costs during the research phase, in particular through grants. After that phase, the fund will complement Member States’ investment by co-financing up to 20% of the costs for prototype development and up to 80% of ensuing certification and testing activities. The EU will not fund the acquisition phase, but the Commission can offer practical support to Member States wishing to procure jointly products and technology.

Customs 2020

The EU customs union territory is governed by common rules and procedures laid down in the EU customs code ( 109 ). They require proper and uniform implementation and application across the EU. Moreover, customs policy and the customs administrations need to constantly adapt to modern trade realities and modern communication tools.

Customs 2020 is a programme to facilitate and enhance cooperation between national customs administrations. This cooperation helps improving the administrative capacity of the customs authorities and strengthen the competitiveness of European businesses, for instance through reducing compliance costs and administrative burden. The coopersation also increases safety and security, protects citizens and the environment.

The EU customs code is a milestone in modernising EU customs, and the EU’s Customs 2020 action programme is indispensable in supporting its implementation.

The key exchange network is the highly reliable common communication network, common to customs and taxation areas. It is composed of 112 internet based gateways in 49 sites located in 33 different countries. Over the years of the customs programme iterations, there has been a steady increase in the number and volume of data exchanged. In 2017 alone, nearly 4.8 billion messages of 5.5 terabytes (TB) of volume were exchanged. Over 11.2 million transit movements took place through the new computerised transit system, with the average number of movements released per business day reaching over 44 000. 5.1 million indirect export movements were recorded in the export control system and some 48 million entry summary declarations were lodged in the EU through the import control system. The outreach of the programme is not always easy to measure as thousands of officials and businesses use the information technology (IT) systems supported by Customs 2020 without realising where they come from.

The programme supported a great number of various types of joint action as well. There were 16 864 project groups meetings, 1 897 workshops, 1 106 working visits, 947 seminars, 203 join communication actions, 180 capacity-building and supporting actions and 72 monitoring activities organised across all participating countries within the programme’s first 4 years in operation.

In 2018, the Commission carried out a midterm evaluation of the Customs 2020 programme ( 110 ), which confirmed that the programme is working well, is needed and adds value. Most of the programme’s joint actions, training and European Information Systems directly help customs administrations to get ready for the modern, well functioning Customs Union.

The European Information Systems are resource-intensive but bring an array of benefits in all areas of customs activities. The benefits include harmonisation of customs procedures, uniform implementation of the customs law, sharing of information and generating economies of scale, particularly through the centralised systems. They are interconnected and interoperable and vastly used in the day-to-day customs operations. Their importance in pursuing modernisation of customs towards a paperless environment was found invaluable and the IT architecture as a whole unmatched and unreproducible at national level.

Customs 2020 programme fosters cooperation and builds trust between customs administrations and their officials. Training activities are also conducive to shared understanding, alignment of interpretations of the customs provisions, standardisation of terminology and ultimately more uniformity into application of the EU law across the Member States.

The midterm evaluation of the programme identified nevertheless some room for improvement in certain areas, such as the simplifying the Performance Measurement Framework or increasing the interoperability of some IT systems.

The Commission proposed to continue the programme post-2020. Customs cooperations and capacity building would be clustered around human-networking and competency-building actions, on the one hand, and information technology capacity-building actions, on the other hand. As with the current iteration of the programme, the vast majority of the proposed budget will be spent on IT capacity-building actions, continuing the approach based on an IT-architecture model where European electronic systems are made of a combination of common and national components. This model has been favoured above the fully centralised architecture, leaving the Member States some flexibility in designing the national-end applications, taking into account their preferences, requirements and constraints.

Fiscalis 2020

The Fiscalis 2020 programme is one of the key measures to support the implementation of European Union taxation policy. It provides a framework to improve the proper functioning of the taxation systems in the single market through enhanced cooperation between participating countries, their tax authorities and officials. The participating countries are made up of the EU Member States and the countries negotiating to join the EU (‘candidate countries’) and potential candidate countries ( 111 ). Due to the programme’s design and objectives, the vast majority of funding goes into the development and operation of the IT systems (around 75%), followed by the organisation of the joint action, studies and training activities.

The Commision carried out the midterm evaluation of the Fiscalis 2020 programme during the course of 2018, assessing its achievements for the first 4 years of operation ( 112 ).

It confirmed that the programme is working well, is needed and adds value. Fiscalis 2020 has played an integral role in reinforcing cooperation between tax authorities in the EU Member States and other participating countries, through its three main types of activities (joint actions, European Information Systems and training). The programme has provided the framework and technological means necessary to work together and share information; thus, implementing EU tax law and fighting tax evasion, fraud and aggressive tax planning in an increasingly mobile Europe. Contributions were most pronounced in the areas of fighting tax fraud/evasion in the areas of value added tax and excise (for information technology such as the mini-one-stop-shop, eforms or vies-on-web).

The information systems supported by the Fiscalis programme have led to substantial, if hard to quantify, cost savings for national administrations in the form of reduced spending on information technology and human resources. Centrally developed systems are cheaper to develop and implement than 28 individual national systems. They also avoid costs relating to interoperability between countries. Where systems are split between EU and national components, the programme ensures interconnectivity and efficient coexistence.

In terms of functionality, major European Information Systems like the Excise Movement and Control System and the Mini-One-Stop-Shop have also been referred to by several interviewees as ‘revolutionary’ in their fields, leading to completely new possibilities for monitoring, sharing of information and prevention of fraud. Secondary benefits include new opportunities for big data analysis for e.g. compliance risk management. The expansion of the Mini-One-Stop-Shop in the next programme (to cover physical products) is expected to generate especially big benefits for tax collection and the facilitation of trade.

Hercule III

Hercule III is a programme ( 113 ) that helps EU countries to combat irregularities, fraud and corruption affecting the EU budget. The programme aims to protect the EU’s financial interests and consequently protect taxpayers’ money and enhance the competitiveness of the EU economy. The programme also finances practical projects, such as the purchase by national authorities of x-ray scanners, sniffer dogs and other detection and investigation equipment to stamp out smuggling and other criminal activities.

A key domain is combating tobacco smuggling which remains a major concern, accounting for estimated annual losses of at least EUR 10 billion to national and EU budgets. Helping to fund x-ray scanners and other technical equipment in harbours and airports, for example, aims to boost national authorities' capacity to fight smuggling. Hercule III also finances the sharing of best practices on issues such as preventing corruption in procurement procedures. Another facet is anti-fraud training, including training aimed at boosting and updating the digital forensic and analyst skills of law-enforcement staff.

The midterm Commission evaluation ( 114 ) demonstrated that the Hercule III programme has largely fulfilled its mission. The evaluation revealed the overall efficiency and effectiveness of the programme for both training actions and technical assistance activities. The stakeholders reported that the programme has been efficiently implemented while effectively addressing the Member States' needs.

The introduction of the electronic submission and processing of grant applications is an important development which has considerably shortened the time for notifying applicants about the outcome of the evaluation procedure.

The new EU Anti-Fraud Programme (2021-2027) aims at continuing and strengthening the support to Member States in their fight against fraud, irregularities and corruption affecting the EU budget.

Pericles 2020

Pericles 2020 funds staff exchanges, seminars, training and studies for law-enforcement and judicial authorities, banks and others involved in preventing and combating euro banknote and coin counterfeiting. Actions can take place within the euro area, in EU countries outside the euro area and in third countries representing a counterfeiting hub. Funding is used for: (i) the provision of grants to competent national authorities (CNAs) interested in implementing actions (‘CNA-implemented actions’); and (ii) the financing of actions implemented directly by the European Commission (‘direct actions’). The annual distributions vary, but around 70% of the annual budget is commonly allocated to competent national authority (CNA)-implemented actions and 30% to direct actions.

In 2018, the programme funded 11 projects; eight originated from the competent national authorities of euro area Member States, while three were initiatives of the Commission.

Anti-fraud information system ( 115 )

The anti-fraud information system sets out and funds a set of anti-fraud information-technology applications operated by the European Commission. These ensure the timely and secure exchange of fraud-related information between the national and the EU competent administrations. It encompasses two major areas: the mutual assistance in customs and the management of irregularities. The system is supported by a portal, which is a single and common infrastructure for the delivery of these services to more than 8 000 registered end-users in more than 1 200 competent services from Member States, partner third countries, international organisations, Commission services and other EU institutions. The portal enables substantial economies of scale and mutual benefits in the development, maintenance and operations of such a wide and diverse set of IT services and tools.

The anti-fraud information system also includes a system for managing irregularities. It gave assistance to the European Commission and Member States in the fight against customs fraud and the administration of the expenditure part of the EU budget.

For example, in 2018, the anti-fraud information system supported mutual-assistance activities including joint customs operations co-organised by the European Anti-Fraud Office (OLAF) and the European Union Border Assistance Mission to Moldova and Ukraine, or organised by Member States or Europol with the support of European Anti-Fraud Office (OLAF). Throughout 2018, five joint customs operations were co-organised or supported under the system. Modules of the system were used for the secure exchange of information in these joint customs operations. The number of active customs fraud cases for which information is available in the mutual-assistance databases of the system in 2018 was 18 340, an increase of 2016 cases in comparison to the previous year. Under the next multiannual financial framework, the anti-fraud information system will be integrated in the future anti-fraud programme.

The future programme will strengthen and streamline the existing union support to the efforts to protect the EU's financial interests and for mutual administrative assistance in customs matters, as well as exploit synergies and create flexibility between various existing actions ( 116 ).

ISA2 — Interoperability solutions and common frameworks for European public administration, businesses and citizens

Coordination issues hamper cross-border and cross-sectorial interoperability. They arise mostly due to the institutional complexity, with multiple layers of governance and differences between national public administrations from various Member States, and regional, local public administrations within the Member States. The ISA2 programme for interoperability solutions and common frameworks for European public administration, businesses and citizens supports the development of digital solutions that enable public administrations, businesses and the public to benefit from interoperable cross-border and cross-sector public services.

The programme is part of a wider policy framework related to the digitalisation of public administrations in the EU. It develops interoperability solutions either autonomously or to complement and support other EU initiatives. It also promotes and maintains the European interoperability framework in cooperation with the Member States and the Commission. The 2018 rolling work programme consisted of 53 actions, having evolved from managing 39 actions in its first year of operation, and 43 actions in 2017. The programme has so far been implemented efficiently with close to all the actions progressing as planned at the end of 2018.

The preliminary findings of the interim evaluation confirm the programme’s relevance and effectiveness and the fact that the programme’s implementation is on track ( 117 ). The programme has contributed to enhancing cross-border interoperability in the EU. By way of example, it raises the awareness about interoperability across EU Member States and helps put the topic on national agendas. It also brings people together, creating networks and helping national organisations meet their counterparts in different countries, thus facilitating exchanges between Member States in the field of interoperability.

These external factors are considered when selecting new actions for ISA2 yearly work programmes. In the context of the next multiannual financial framework, ISA2 will be succeeded by the digital Europe programme, which will enlarge the scope of intervention and leverage synergies with actions from the current Connecting Europe Facility and Horizon 2020 programmes.

European statistical programme

The European statistical programme as laid down in Regulation (EU) 99/2013 ( 118 ) provides the framework for the development, production and dissemination of European statistics for the period 2013-2020. The statistics produced within the framework of the programme are indispensable for EU decision-making and for the measurement of the performance and impact of key initiatives such as the investment plan for Europe, the European Pillar of Social Rights, or the energy union.

The European statistical programme is designed to provide quality statistical information in a timely manner while keeping a balance between the economic, social and environmental fields. It serves the needs of the wide range of users of European statistics, including decision-makers, researchers, businesses and the public in general, in a cost-effective manner without unnecessary duplication of effort.

A second midterm evaluation of the European statistical programme 2013-2020 was performed in 2018, covering the years 2015-2017. The evaluation indicates that the programme is run efficiently, that it provides clear EU added value and is consistent both internally and externally with other initiatives aiming at producing statistics. The results also show that the European statistical programme has contributed and continues to contribute to satisfy the user needs and to the design and monitoring of policies but more is needed. Eurostat and the European statistical system are modernising the statistical production processes to respond to such needs while taking advantage of new technologies. Under the next multiannual financial framework, these activities will be integrated in the new single market programme, while preserving the necessary professional independence in the delivery of European statistics. The integration of different single market-related instruments centrally managed by the Commission into one programme will reduce overlaps, increase synergies and facilitate communication and networking with all of the various stakeholder groups. Such a consolidation of activities provides higher value for money and cost-efficiency.

Nuclear-decommissioning assistance programmes in Bulgaria, Slovakia and Lithuania

Bulgaria, Lithuania and Slovakia agreed as part of their accession to the EU to close and decommission a number of first-generation nuclear power reactors power plants (eight units at three different sites: Kozloduy, Ignalina and Bohunice, respectively) before the end of their envisaged operational lifetime. Given the financial burden the process would entail and acknowledging the long-term nature of the decommissioning of the nuclear power plants, the EU committed to providing financial assistance to the three countries.

In Bulgaria ( 119 ) the programme has seen important waste-management infrastructures become operational. In 2018, in particular, a facility for high-performance volume reduction of radioactive waste entered into service. The operational feedback will be of high interest to other organisations that treat radioactive waste in the EU as they are confronted with similar challenges.

In Slovakia ( 120 ), there was significant progress in 2018 notably as regards decontamination and dismantling both in turbine halls and auxiliary buildings (demolition of four cooling towers) and in the reactor building (decontamination of the spent-fuel pools and other tanks). The demolition of the cooling towers attracted widespread public attention and was a visible demonstration of the site's progress towards clean-up. The decontamination in the reactor building has greatly contributed to reducing the radiation exposure of the personnel concerned.

In Lithuania ( 121 ), a second reactor was fully defueled in February 2018, months ahead of schedule. Two reactors are now defueled. By 31 December 2018, more than 50% of spent-fuel assemblies had been safely loaded into casks and put into storage meaning the level of radiological hazard and risk to the general public have substantially decreased.

A very important aspect, as highlighted also by the evaluation finalised in 2018 ( 122 ), is the additional value the nuclear-decommissioning assistance programme brings in terms of building up knowledge and expertise. This has helped the three countries concerned. For example, Slovakia helped Bulgaria to draft the specifications for the call for tender in support of the preparation of the reactor building for the decontamination of the primary circuit, after having successfully completed the decontamination of their own primary circuit ( 123 ). The knowledge is also important, given the non-negligible number of nuclear power plants across the EU that will require decommissioning in the future.

In its proposal for the multiannual financial framework, the Commission included support to continue these activities.

Economic, social and territorial cohesion (budget heading 1B)

In 2018, EUR 55.5 billion was allocated to the programmes under heading 1B, representing 35% of the total EU budget for the year. This heading covers the youth employment initiative, the Fund for European Aid to the Most Deprived and three funds that work together to support cohesion across all EU Member States ( 124 ):

·the European Regional Development Fund (ERDF)

·the European Social Fund (ESF)

·the Cohesion Fund.

Chart: Main programmes financed in 2018 (commitment appropriations) under heading 1B, Economic, social and territorial cohesion. The category ‘other programmes’ includes among other outermost and sparsely populated regions, technical assistance, Contribution to the Connecting Europe Facility (CEF), Pilot projects and preparatory actions 

Source: European Commission.

Cohesion policy contributes to the economic, social and territorial cohesion of the EU by reducing the economic and social disparities that still exist between its regions and countries. This policy is one of the EU’s most important sources of investment, contributing to the delivery of the Europe 2020 objectives by supporting growth and job creation at EU level and structural reforms at national level. The funds are complemented by the European Fund for Strategic Investments, which leverages public and private investment, supports structural reforms and improves access to funding.

Cohesion policy supports the completion of the digital single market and the energy union and, by investing in energy, environment, climate and sustainable transport, makes a significant contribution to Europe’s transition to a low-carbon economy. Cohesion policy also contributes to the development of the internal market, to the comprehensive approach to migration policy, and to the implementation of the European Pillar of Social Rights. This is achieved for example by moderating the effects of poverty and the social exclusion of people who find themselves in situations of severe deprivation and by supporting (youth) employment.

Despite having started more slowly than in the 2007-2013 period, the rate of project selection in the current programming period has now caught up. By December 2018, the European Regional Development Fund, the Cohesion Fund, the European Social Fund and the youth employment initiative had selected more than 1 million projects for support all over Europe, amounting to EUR 362 billion of the total financing available for the period. This level of project selection over 2014-2018 is comparable to the same timeframe of the 2007-2013 period.

Note: Figures, except (a) represent the expected impact from the 2014-2020 Cohesion Policy projects that started to receive support before 31 December 2018. 

Sources: Opendata platform on European Structural and Investment Funds ( https://cohesiondata.ec.europa.eu/ ); 2018 Annual Activity Report of the Directorate-General for Regional and Urban Policy; 7th Report on economic, social and territorial cohesion; common indicator and annual implementation reports.

European Regional Development Fund and Cohesion Fund

Programme objectives

The European Regional Development Fund and the Cohesion Fund are two of the EU’s main investment instruments, delivering a critical mass of investment in EU priority areas. They provide strong support for the implementation of the country-specific recommendations issued to Member States in the context of the European Semester for economic policy coordination. The 2014-2020 programmes were the first programmes to be explicitly linked to the European Semester annual. Relevant country-specific recommendations (CSRs) were notably a focal point for effective programming and are reflected in the adopted partnership agreements and ongoing programmes, which currently provide an impetus for Member States to implement structural changes and policy reforms through investment targeting structural weaknesses and growth bottlenecks. The funds played an important role in countering the immediate effects of the economic and financial crisis, as well as strengthening the structural potential of Europe’s regions for the longer term. The investment priorities for 2014-2020 are the following.

Implementation and latest achievements

Cohesion policy, representing almost a third of the total EU budget, has been a major source of public investment in many Member States during and after the crisis providing, for example, almost 9% of general government capital expenditure on average in the EU-28 and 41% ( 125 ) in the EU-13 Member States in 2015-2017 ( 126 ). Cohesion policy also plays a key role in supporting the achievement of the Juncker Commission's priorities and contributing to solidarity and unity in Europe. Investments in one country create positive spillovers in (around 0.12% of GDP ( 127 ) in non-cohesion countries.

Cohesion policy will be responsible for nearly EUR 1 trillion of additional GDP by 2023. The policy has benefited the economies of all EU Member States and supported them during difficult economic times.

Five years into the 2014-2020 funding period, the implementation of cohesion policy programmes continues at full speed, with EUR 270 billion already allocated to projects in Member States by December 2018, which is almost 77% of the funds’ total financial allocation. This represents more than 290 thousand projects. EUR 80 billion remains to be allocated to projects, with full completion of investment by 2023 when the funding period will close. This represents further acceleration compared to the results registered at the end of 2017, which stood at 55% of total funding allocated to projects. More importantly, this trend slightly exceeds the one of the last programming period (dotted line in the following chart) and anticipates a sustained pace of implementation in the second half of the programming period.

Chart: Project selection: comparison period 2007-2013 with the current period. Calculation based on total (EU plus national) cost of selected projects. Year N represents 2007 for the 2007-2013 programmes and 2014 for the 2014-2020 programmes.

Source: European Commission.

Investments in research and innovation have continued to progress at a significant pace in 2018, showing good performance across most Member States. At the end of 2018, over 50 000 specific research and innovation projects have been selected, representing 73% of the total amount planned. Since 2014, more than 15 200 researchers have benefited from improved research infrastructure and 7 000 enterprises are cooperating with research centres across the EU. As a result of projects implemented so far, more than 3 200 new products have been introduced onto the market by businesses that have benefited from the funding.

The European Regional Development Fund and the Cohesion Fund help businesses to increase their competitiveness, develop new products, find new markets and create new jobs, with particular emphasis on innovation and high growth firms and programmes aimed at supporting the innovative capacity of small and medium-sized enterprises. The wide range of support on offer to small and medium-sized enterprises is also crucial to achieving a deeper and fairer internal market with a solid industrial base. By the end of 2018, an estimated 88% of the total amount has been allocated to over 95 000 projects to improve the competiveness of small and medium-sized enterprises.

Cohesion policy is the largest EU financing source for modernising the European transport system and adapting it to new challenges. Support for the TEN-T rail and road network plays a prominent role, as well as investments in sustainable urban mobility, which will make the daily commute cleaner, faster and safer for Europe’s citizens. By the end of 2018, around 2 500 projects allocated to network infrastructure projects were supported.

A substantial share of funding is devoted to improving the business environment and supporting entrepreneurship. For instance, more than 90 000 start-ups are supported. An important aspect is to facilitate access to finance; since the beginning of the programming period, EUR 2.7 billion has been invested using the leverage effect of financial instruments.

Croatia — ESIF Venture Capital Fund to support innovative start-ups

Croatia set up the ‘ESIF Venture Capital Fund’ in June 2018 — the first Venture Capital instrument supported by European Regional Development Fund. Thanks to EUR 35 million from the Operational Programme Competitiveness and cohesion 2014-2020, the fund will invest into risk capital funds targeting local small and medium-sized enterprises with high growth potential, allowing them to scale up and compete globally. The ESIF Venture Capital Fund will target in particular earlier stage investments and will offer a fully-fledged acceleration programme. It adds a new element to the successful portfolio of debt instruments supported by the European Regional Development Fund and will contribute to developing a sound and dynamic start-up ecosystem in the country.

This is a good example of how cohesion policy invests in jobs and growth, in line with the investment plan for Europe. At least 50 seed stage and 15 start-up stage companies will receive vital support. The instrument is also expected to have strong spill-over effects in terms of business angels, entrepreneurial workshops and corporates and a strong pipeline leading to a much more pronounced interest of regional venture capital funds to invest in Croatia.

Significant progress has also been made in the area of environmental protection and promotion of resource efficiency, where 12 500 projects were supported by the end of 2018. Even though such investments have a long lifecycle, many results have already been achieved. Millions of citizens are now protected against natural disasters such as floods and fires. Hundrends of thousands of citizens benefit from facilities that improve water supply and water treatment. Implementation varies across and within Member States. Progress remains a bit slower as regards the objectives linked to the increase of waste-recycling capacity and rehabilitation of land, as projects selected so far cover only a modest fraction of the expected target. This is notably due to the lengthy planning procedures for such projects.

The European Regional Development Fund is the main investment tool for the digitalisation of the public sector and of small and medium-sized enterprises and for the roll-out of broadband. Its aim is to achieve efficiency gains thanks to e-government solutions, smart energy and transport solutions by delivering tailored support on the ground and matching local needs and opportunities. By the end of 2018, some 7 800 projects were selected on the ground to support the achievement of a connected digital single market, representing 63% of the total planned. While notable progress has been registered across several Member States in 2018, some difficulties have slowed down the implementation of broadband projects in the early stages of implementation in certain countries (such as difficulties in mapping of intervention areas and selection of beneficiaries, state aid issues). In response to these difficulties, targeted actions aimed at improving the administrative capacity of programme authorities in this area continue to be implemented.

Appropriate follow-up to the action plan on rural broadband ( 129 ) was ensured, with country visits (Bulgaria, Croatia, Czechia, Romania, Slovakia) for which also requests for reprogramming were examined and bottleneck in implementation discussed. Among other initiatives, the work of the network of Broadband Competence Offices across Member States, supported by a Brussels-based facility, has started to bring positive outcomes. Through single points of contact within the Member States, this network provides information and/or advice to any public authority wishing to roll-out high-speed broadband, as well as any potential broadband project promoter enquiring about the EU/national/regional funding available for broadband. All these actions are expected to help improve the digital performance of regions and Member States, thus positively contributing to the attainment of the target set for the impact indicator capturing digital competitiveness of Member States.

Achieving an energy union will ensure security, affordability and sustainability of energy supply in Europe, while also making the EU less dependent on the international market and external sources of energy raw materials. Cohesion policy is the biggest EU investment source in making the energy union happen on the ground and supporting EU’s regions and cities in their path for reaching the EU 2020 and 2030 climate and energy targets and achieving a socially fair transition.

Hungary – Support for Hungary’s largest power plant

The first solar power plant under the 2018-2019 photovoltaic project of the MVM Group has been built in the vicinity of Felsőzsolca and Onga on nearly 45 hectares, thanks to a total investment of around EUR 28 million, provided by European Regional Development Fund and the national budget. It has started generating electricity as the unit with the largest installed capacity in Hungary – 20 megawatts. The Felsőzsolca Solar Power Plant is the first to start electricity generation among 110 solar units planned.

Netherlands - Upscaling of Solar Photovoltaic Power for rental tenants.

This project facilitates the large-scale installation of solar photovoltaic systems on rented accommodation. The consortium of market parties aims at removing existing bottlenecks while ensuring that the huge demand for solar panels among rental tenants can be met. The integrated cooperation between experienced and expert market parties supplemented by external specialists, facilitates the large-scale rollout of solar photovoltaic power for rental tenants. The installation of the solar photovoltaic systems, initially in 8 500 homes, rising to 30 000 homes over the next few years, will create many employment opportunities. Furthermore, businesses responsible for the fitting and installation of the phtovoltaic power panels, converters and cable work will also grow.

Cohesion policy is also the main EU funding source on disaster-risk management. Over 25 000 projects in the area of low-carbon economy have been selected and either will be or are already being implemented on the ground. For investments targeting climate-related goals, nearly 2 500 projects have been selected.

Measures supported by the European Regional Development Fund are addressing the needs created by the exceptional flow of migrants to Europe by focusing on support for reception and the effective integration of legal migrants and asylum seekers in the field of employment, social inclusion and education. A significant contribution towards these objectives results from support for small and medium-sized enterprises, through which business support services reach all potential entrepreneurs, including those from more vulnerable groups such as migrants, with the aim to make the EU in its entirety stronger and more cohesive. Project selection rate in the area of social inclusion exceeds 60% at the end of 2018, with close to 8 000 projects already selected and being implemented.

Assessment and evaluation

The evaluation of the predecessor programmes ( 130 ) found that regions and countries in the EU benefit from the cohesion funds owing both to direct effects (via the investment) and indirect effects (via increased trade).

The evaluation found that support to small and medium enterprises has high potential impact, provided it focuses more on helping dynamic firms to grow, on smart specialisation strategies and on facilitating regions to move up the economic chain, rather than trying to maintain the ‘old’ economy of the past. Additionally, high value added contributions are evidenced in themes such as the low-carbon economy, sustainable urban development and regional cooperation. This feedback has been taken on board in the Commission proposal ( 131 ) for the next multiannual financial framework, which maintains thematic concentration with priorities to support innovation, the digital economy and small businesses, as well as the low-carbon and circular economy.

The evaluation also concluded that the most effective strategy to attract large enterprises is not through financial incentives but by improving local conditions such as the local business environment. Airport investments have tended to perform poorly, except in the outermost regions where there is a benefit. The proposal for the next multiannual financial framework, contains a list of excluded activities such as direct support to large enterprises, airport infrastructure and some waste-management operations such as landfills.

It was also found that financial instruments have the potential to be a more efficient means of funding investment in some policy areas, but there were delays in implementation and obstacles to their widespread use. These issues were addressed in the Commission proposal for a common provisions regulation ( 132 ) for the post-2020 period as it provides for flexibility and responsiveness to future needs, for instance by enabling small transfers of resources without operational programme modification. Additionally, operational programme allocations are set out for the first 5 years and then for the last 2 years are allocated on the basis of a review. The implementation of financial instruments is simplified, aligning many of the relevant provisions with those of grants.

The evaluation found that management, control and audit systems were complex. This caused administrative uncertainty and delays in implementation. A recent study ( 133 ) requested by the Commission identified substantial administrative costs which are estimated at 2.2% of total eliglible costs for the European Regional Development Fund and 1.8% for the Cohesion Fund (overall figure is 4% for the European Structural and Investment Funds in general). The Commission is learning from this and the proposal for the future programmes includes many measures to simplify and reduce administrative burden. Greater use of simplified cost options and payments based on conditions could substantially reduce total administrative costs. Certain rules for major projects and revenue generating investments are eliminated. Additionally, a more proportionate approach to controls and audits will bring a major reduction in the number of verifications and the audit burden for low-risk operational programmes.

The European Court of Auditors reported ( 134 ) that the Commission implemented various measures aimed at increasing the focus on results in the 2014-2020 period; it welcomed the improvements, but also highlighted weaknesses in the quality of monitoring the information related to spending on cohesion policy. The Court noted that monitoring information remains mostly output-oriented and recommended that the Commission set out common result indicators for the European Regional Development Fund. In response, the Commission proposal ( 135 ) for the funds for 2021-2027 maintains and refines the common set of output indicators, while adding for the first time a common set of result indicators, for the performance frameworks which are to be established by Member States for the monitoring, reporting and evaluation of programme performance. The proposal would enable results to be reported regularly updated on the Open Data Platform ( 136 ) and comparison across programmes and Member States, which will feed into performance assessment and evaluations.

The link of the programmes with the European Semester is strengthened for the period 2021-2027. As part of the 2019 European Semester cycle, the Commission provided tailored country-specific analysis of investment needs and bottlenecks to investments, taking into account relevant regional and territorial disparities. Based on these analytical elements and taking into account cohesion policy objectives, country-specific investment guidance were developed and summarised in an annex to the country reports (Annex D). This annex provides the basis for the dialogue between Member States and the Commission services in view of the programming of the cohesion policy funds for 2021-2027.

European Social Fund

Programme objectives

Making Europe cohesive, resilient and competitive in the future means investing in its people now: in their education and training, skills and employability and in their potential to create businesses and to innovate, as well as in their health and their broader living conditions. Investing in people and building a fairer and more social EU have been among the main priorities of the current Commission from the very start.

The European Social Fund is the EU’s main instrument for supporting jobs, helping people to get better jobs, ensuring fairer job opportunities for all and supporting upskilling and reskilling. It has a direct link to the priorities and headline targets of the Europe 2020 strategy in terms of employment, education and poverty and is a key tool to deliver on the principles and rights enshrined in the European pillar of social rights. The thematic objectives are the following.

Implementation and latest achievements ( 137 )

By end 2017, the European Social Fund and the youth employment initiative had supported 15.3 million people, of whom 7.9 million were unemployed and 4.9 million were inactive. By then, Member States had declared that 2.4 million young people had already benefited from the youth employment initiative. Amongst all participants, 1.4 million were in employment, 1.9 million have gained a qualification and 870 000 participants were in education or training thanks to the European Social Fund or the youth employment initiative support.

Investments from the European Social Fund and the youth employment initiative are the main source of EU-level support to structural reforms in Member States, especially in areas related to the reform of public employment services, activation measures, the development of individualised integrated pathways for employment, the set-up and implementation of dual vocational education and training, apprenticeship measures or investment in (child)care aimed at increasing female participation in the labour market.

Making full use of the European Social Fund ( 138 )

With a budget of EUR 86.4 billion for 2014-2020, the European Social Fund is one the key EU instruments to support the implementation of the country-specific recommendations. The operational programmes directly contribute to promoting sustainable and high-quality employment, social inclusion, investment in education and training and institutional capacity building. The youth employment initiative is a dedicated instrument with a budget of EUR 8.8 billion, half of which comes from the European Social Fund. The youth employment initiative targets young people not in employment, education or training, in the EU regions having the highest youth unemployment rates in 2012, providing them with job and training opportunities

Between 2014 and 2017, over 15 million participants benefited from the European Social Fund and the youth employment initiative support, including almost 3 million long-term unemployed persons (17%). Young people below 25 years of age (42% of total participants) and low-skilled people with primary or lower secondary education (44% of total participants) are key target groups of these interventions. Implementation, which showed a sharp acceleration in 2017, should continue steadily in the coming years.

Over 2.4 million people were supported by the youth employment initiative between 2014 and 2017, out of which:

·780 000 young people were in education/training and gaining a qualification or in employment, including self-employment, upon leaving;

·550 000 young people received an offer of employment, continued education, apprenticeship or traineeship.

The fact that the number of European Social Fund and youth employment initiative participants has doubled since end-2016 indicates a sharp acceleration in the implementation of projects on the ground.

Member States are stepping up their outreach efforts, making services more accessible to young people and ensuring a better identification of those in need.

In Finland, the one-stop guidance centres for youth (Ohjaamo, originally operating under the European Social Fund) were made permanent and will receive extensive financial support, aiming to reach a total of 10 000 young people. Youth employment agencies are being rolled out across Germany. Cyprus has launched an outreach project supported by the Ministry of Education in cooperation with the Ministry of Labour and the Cyprus Youth Board, aiming to reach out to 4 000 inactive people who are not in employment, education or training and to provide them with activation support through counselling and tailor-made training. In Croatia, a system for mapping eligible participants has been in place since November 2017, with the aim of identifying the non-registered ones and their characteristics to better target measures to this group.

In a number of Member States, the European Social Fund supports capacity building and structural reforms ( 139 ). For instance,

in Latvia, the European Social Fund supports the strengthening of social dialogue. The goal is to develop a legal framework facilitating social dialogue in different sectors.

In Spain, the fund supported the strategy for integration into the labour market. Similarly, the European Social Fund is currently investing resources in the support of the ‘apprenticeship contract’ both in training programmes and in alleviating companies’ social-security contributions. The apprenticeship contract is also one of the offers under the Spanish Youth Guarantee, especially aimed at young people without any previous qualification or with a very low overall qualification.

In Czechia, the European Social Fund and the European Regional Development Fund provided a considerable boost to the allocation for childcare facilities (approximately EUR 220 million across all Czech European Social Fund and European Regional Development Fund programmes, i.e. almost tripling). The demand for services on the ground has since been confirmed by a significant interest of applicants. Legislative changes were introduced to enlarge the requirements for opening a preschool education entity and enable employers to set up kindergartens. So far, more than 9 000 kindergarten places have been created.

In Portugal, the European Social Fund supports the institutional capacity building of social partners in view of their important role in the modernisation of active labour-market policies and vocational education and training.

Assessment and evaluation ( 140 )

Member States completed 164 European Social Fund and multifund evaluations related to the 2014-2020 period by mid-2018. These evaluations assess both the process and the implementation of the Fund. The Commission launched four thematic evaluations in 2018 (on support to youth employment, on support to employment and mobility, on support to education and training and on support to social inclusion).

In 2018, the Commission prepared the impact assessment and the proposal for the European Social Fund Plus 2021-2027 (ESF+). Some key areas identified for improvement were ( 141 ) as follows.

·Better policy alignment with the EU-level policy priorities and economic governance in the context of the European Semester.

·The 2014-2020 result orientation was strengthened but has so far not proved to be a sufficient performance incentive for Member States.

·Despite some progress the management and delivery of the fund remains too complex and the shift from a logic based on inputs towards one based on results, while it has improved in 2014-2020, has not fully taken place.

·The youth employment initiative: its financial management procedures (being funded from two funding sources — the youth employment initiative and European Social Fund allocations) as well as its additional reporting requirements (common indicators of the European Social Fund and the youth employment initiative result indicators) are perceived by beneficiaries and implementing authorities as increasing the administrative burden. Focus for further improvement should relate to better involve more the young people who are furthest away from education, training and employment as well as to increase the overall quality of the job and training offers funded by the initiative in the context of Youth Guarantee schemes.

On 30 May 2018, the Commission adopted a proposal for the European Social Fund Plus ( 142 ). Within the broader framework of the European Structural and Investment Funds, this fund will make it possible to better focus support on the challenges identified in the European Semester. In this context, European Social Fund Plus will merge the:

·European Social Fund and the youth employment initiative

·Fund for European Aid to the Most Deprived

·EU programme for Employment and Social Innovation

·EU Health programme.

Fund for European Aid to the Most Deprived

Programme objectives

The Fund for European Aid to the Most Deprived supports EU Member States’ actions to provide assistance to the most deprived. This includes food, clothing and other essential items for personal use.

This fund aims to alleviate the worst forms of poverty in the EU such as food deprivation, homelessness and child poverty. It is implemented under shared management, with simplified rules and reduced administrative requirements as compared with the European Social Fund. The allocation for the Fund for European Aid to the Most Deprived for 2014-2020 amounts to almost EUR 3.8 billion.

Implementation and latest achievements ( 143 )

·In 2017, the Fund for European Aid to the Most Deprived supported 12.9 million people.

·About half of the end recipients are estimated to be women, 30% are children aged 15 or below and about 10% are migrants, participants with a foreign background or persons belonging to a minority (including marginalised communities such as Roma).

·Social-inclusion support reached more than 36 000 persons.

·Over 1.3 million tonnes of food were distributed cumulatively during the period 2014-2017, and circa 370 000 tonnes alone (i.e. approximately 30%) in 2017.

The monetary value of material support distributed until 2017 reached EUR 19.5 million. Compared to 2016, the monetary value of basic material assistance increased by 25%.

Assessment and evaluation 

The results of the 2018 midterm evaluation ( 144 ) show that the Fund for European Aid to the Most Deprived has a notable volume effect in nearly each Member State. The supported food, material aid and social-inclusion measures make a difference to the most deprived, including those who may be otherwise left out by mainstream social assistance or who need immediate support.

Networking and knowledge sharing between institutions, partner organisations and social services, as well as across different partner organisations played an important role in disseminating good practices. This was in particular the case for non-financial assistance to the most-deprived persons.

The midterm evaluation identified a number of weaknesses in the implementation of the Fund for European Aid to the Most Deprived. Erroneous interpretations of the EU regulatory framework or of national requirements resulted sometimes in (a) delays in the start-up phase of the programme; (b) administrative obstacles mostly linked to national procurement policies and to additional requirements; (c) lengthy documentation procedures and instructions; and (d) excessive procedures for the certification of end recipients.

Similarly, setting a narrow list of eligibility criteria for the end-beneficiaries has the disadvantage of excluding those who do not have access to the social system and does not permit promptly responding to emergencies.

The Court of Auditors found ( 145 ) that the Fund for European Aid to the Most Deprived contributes to Member States’ approaches to alleviating poverty and contains innovative social-inclusion measures, but it could be better targeted to the most in need and there could be more focus on social inclusion instead of on basic food and material assistance.

On 30 May 2018, the Commission proposed a European Social Fund Plus, in which the Fund for European Aid to the Most Deprived will be merged with the European Social Fund. This will allow for an easier combination of provisions of food/material assistance with support for social inclusion and active measures. It will help create synergies, thus further strengthening the social-inclusion dimension of the support and providing an integrated pathway out of poverty. It will also help address the current shortfall identified in evaluations as the absence of a common strategic approach sometimes stands in the way of a seamless transition by vulnerable participants from projects fuded by that fund to European Social Fund projects.

Sustainable growth: natural resources (budget heading 2)

Through the common agricultural policy (specifically the European Agricultural Guarantee Fund and the European Agricultural Fund for Rural Development) and the maritime and fisheries policies (in particular through the European Maritime and Fisheries Fund), the EU budget supported viable food production, the sustainable management of natural resources, climate action and balanced territorial development. Viable food production helps boosting jobs, growth and investment, as a large number of jobs in agriculture, together with food processing, food retail and food services, depend on it. Promoting the sustainable management of natural resources and climate actions ensures that the basis for agricultural jobs remains sustainable. Fostering a balanced territorial development of rural areas also contributes to growth, jobs and investment. Closing the digital divide between urban and rural areas is an important enabler for businesses to remain competitive in rural areas. Viable food production with high food-safety standards also plays an active role in a balanced and progressive trade policy to harness globalisation. The EU also plays a leading role in tackling the growing ocean challenges, not only at European level but also on an international scale.

Chart: Main programmes financed in 2018 under heading 2, Sustainable growth: natural resources. All amounts in EUR million. The category ‘other programmes’ includes among other decentralised agencies, Other actions and measures, Pilot projects and preparatory actions, Actions financed under the prerogatives of the Commission and specific competences conferred to the Commission

Source: European Commission.

For 2018 EUR 58.8 billion has been allocated to heading 2, which represents 37% of the total 2018 EU budget. Heading 2 covers the two pillars of the common agricultural policy: Pillar I consists of the market support measures and the direct payments financed by the European Agricultural Guarantee Fund; Pillar II comprises the rural development support financed by the European Agricultural Fund for Rural Development. The heading also covers the European Maritime and Fisheries Fund and the international dimension of the common fisheries policy, as well as activities in the fields of climate and environment through LIFE, the programme for the environment and climate action ( 146 ). 

European Agricultural Guarantee Fund

Programme objectives

The European Agricultural Guarantee Fund encourages smart, sustainable and inclusive growth, helping to achieve the common agricultural policy’s objectives of viable food production, sustainable management of natural resources (with climate action) and balanced territorial development. Direct payments provide a basic protection of farm income against the particular shocks to which agriculture is exposed (notably price and weather related).The fund’s main specific objectives are the following:

Implementation and latest achievements

Direct payments

Around 6.5 million farms, covering 90% of farmed land, benefited from direct payments. In 2017 ( 147 ), this support constituted 38% of their farming income ( 148 ). Since the last common agricultural policy reform in 2015, direct payments have been better targeted thanks to different payment ‘layers’ addressing the particular needs of young farmers, smaller farmers, specific sectors or regions in difficulties, as well as the environment and climate. These changes to the structure of the direct payments system — along with redistribution and capping possibilities — have started to contribute to a more equitable payment distribution. The stabilising effect of direct payments is supplemented by market instruments, which now operate at a ‘safety net’ level instead of frequently steering the EU market as they once did.

As direct payments are granted per hectare of eligible area, there is a strong correlation between the distribution of direct payments and the distribution of area between farmers. This results in larger farms concentrating the largest amounts of support ( 149 ) and in a high number of very small beneficiaries, reflecting the high fragmentation of the farm sector in the EU and the relative contribution of these farm groups to the economics of the sector. For the financial year 2017, nearly 50% of the beneficiaries of direct payments had less than 5 hectares and covered less than 5% of the total area supported.

Chart: Distribution of EU direct support to EU farmers.

Source: CATS control data (claim year 2016).