Rapporteur : Isabelle BOUDINEAU (FR/PES), Member of the Regional Council of Nouvelle-Aquitaine

POLICY RECOMMENDATIONS

THE EUROPEAN COMMITTEE OF THE REGIONS (CoR)

Introduction

1.

welcomes the fact that the need for a more robust and effective cohesion policy is recognised by so many stakeholders and political groups in the European Parliament, but also in the European Council’s Strategic Agenda 2024-29, in the Commission president’s political guidelines and in several texts such as the Letta report on the future of the single market, which enshrines the concept of ‘freedom to stay’, and the Draghi report on the future of European competitiveness. This is evidence of political consensus on the need for a strong, modernised and decentralised cohesion and growth policy;

2.

notes that information-gathering and analyses were carried out before the policy and legislative frameworks were established for each of the cohesion policy programming periods. This realigned the link with the overall EU policy framework and the synergies with other EU policies and funds, while optimising the system for implementing cohesion policy;

3.

welcomes with interest the European Commission’s willingness to propose a simpler, more targeted and needs-driven future multiannual financial framework (MFF), based on policies rather than programmes; is, however, still very concerned about the proposal of each State having a single plan which links key reforms and investments. Points out that in order to be effective and relevant, this plan (from design to negotiations) must absolutely be based on the principles of partnership and multilevel governance, with regions at the heart of the system

4.

firmly believes, like the Letta report on Much more than a Market or the High-Level Group’s report on Forging a sustainable future together: Cohesion for a competitive and inclusive Europe, that in taking account of local situations, place-based policies are crucial for boosting the competitiveness, sustainability, productivity, social inclusion and resilience of Europe as a whole;

5.

reiterates that in order to comply with the principle of active subsidiarity, it is essential to keep regional programmes part of the delivery of cohesion policy funds; the local approach is best suited to identifying the challenges, needs, possibilities and goals specific to each region and enables EU policies and initiatives to be effective and sustainable. The EU needs the effective involvement of regional actors, which are the most appropriate institutional level for planning and implementing territorial policies; a single plan per Member State will inevitably be designed without intimate knowledge of the needs of each region and thus of the needs of Europeans;

6.

has already, in several opinions (1), expressed grave concern at the negative effects of a centralised approach and reiterates the need to observe the fundamental principles of cohesion policy: active subsidiarity, a place-based approach, partnership, multi-level governance, shared management and multiannual regional programmes;

7.

stresses the key role already played by regions (particularly when they are managing authorities) in steering the design of programmes which serve both European objectives and subnational strategies: focus on the cross-sectoral objectives of competitiveness (research, innovation, modernising industry, digitalising the economy, upskilling employees, etc.) or on environmental issues (energy, biodiversity, decarbonised mobility, thermal renovation, etc.) or on social inclusion is an essential component of the programmes; regions want to continue playing this role after 2027. Finally, regions should be given the flexibility they need to select the investments and instruments that are best suited to their circumstances on the ground and that will also contribute to the European strategic objectives that the future cohesion policy is to achieve;

8.

stresses that regional and local managing authorities bring added value to European priorities: by helping to establish policy objectives and set performance indicators, by implementing them and selecting projects on the basis of shared, consistent criteria, and by guaranteeing that local stakeholders are involved in the partnership and thus bringing cohesion policy closer to Europeans and subnational areas. Confining them to an executive role would deprive the EU of this subnational intelligence and effectiveness;

9.

points out that cohesion policy is the main link between Europeans and Europe, and that it is a tangible form of communication policy. Believes that establishing a single plan per Member State could strongly compromise the visibility of the EU in regions and among local stakeholders and citizens;

10.

points out that this subnational intelligence helps to create an environment and conditions conducive to economic development throughout the region, while supporting established local firms, such as mid-caps, which maintain the socio-economic stability of their region, as well as new businesses, including agile start-ups that generate innovation. This dual dynamic in the regional ecosystems brings increased competitiveness to the EU and improves its position as a global player;

11.

understands the interest in terms of reforming cohesion policy towards a more performance-based approach to make it more effective and impactful, provided however that this reform does not undermine its main features;

12.

therefore welcomes the request from the Polish Presidency of the Council to draw up an opinion on this matter;

Cohesion policy as a key driver for achieving EU objectives and reforms

13.

stresses that there is considerable evidence, both quantitative and qualitative, that cohesion policy is effective. The studies prove that it is a key driver for achieving the EU’s strategic objectives: competitiveness, success of the single market, addressing the growing demographic challenges such as depopulation, supporting the green and digital transitions, and catering for the enlargement process;

14.

stresses that cohesion policy has had a significant impact on the socio-economic development of EU regions, especially less-developed regions, where GDP is expected to be between 10 % and 13 % higher by 2030 than it would otherwise have been;

15.

points out that the twice-yearly cohesion reports highlight the significant results of cohesion policy in a wide range of areas: creating skilled jobs, energy performance, improving health services, public services operating and staying in areas in decline or suffering from competitiveness disadvantages. Notes that the investments made provide structure: they pave the way for the future without overlooking anyone. Stresses that cohesion policy leads to local development and interregional equity, strengthening administrative capacity and subnational governance and promoting local assets on the basis of shared strategies and project methods. Cohesion policy funds are a key component of public investment in many countries;

16.

remains convinced that European territorial cooperation (ETC) is the highest expression of European added value and should be reinforced. It is one of the most important tools for strengthening European citizenship and the internal market and for removing barriers to free movement: the EU’s competitiveness benefits from more liaison and cooperation between regions, which are test beds for innovation;

17.

notes, furthermore, that cohesion policy boasts excellent budgetary performance, with absorption rates averaging almost 100 % at the end of each programming period;

18.

disputes the allegations regarding the low uptake of cohesion policy appropriations. A distinction needs to be made between commitment rates and payment rates. The lower rate of disbursement of funds, i.e. payments to beneficiaries and consequently certification of expenditure to the European Commission, is due to the late adoption of the European fiscal framework and regulations. These delays cannot be attributed to the implementation process itself. Moreover, the development of a truly partnership-based programme takes time. Lastly, the pace of absorption (in relation to the 2014-2020 and 2021-2027 financial frameworks) has been affected by an exceptional context of crises, and by the fact that the Recovery and Resilience Facility (RRF) was being implemented at the same time as the cohesion recovery funds (REACT-EU) were being managed;

19.

points out that the programmes adopted under 2021-2027 cohesion policy were drawn up and negotiated with a view to investing EUR 527 billion in the EU’s long-term strategic objectives for competitiveness, decarbonisation, connectivity, social inclusion and territorial development. Points out, in this regard, that thematic concentration guarantees that cohesion policy serves the main European objectives. This mechanism gives impetus to European priorities in all regions benefiting from the leverage effect of European investment aid;

20.

believes that while cohesion policy already meets many of its objectives, there is room for improvement, including with regard to strengthening coordination and synergies between instruments and policies and streamlining and simplifying its procedures, and thus providing managing authorities with the flexibility they need to make the policy more impactful and effective. For cohesion policy to do even better, the European Semester needs to be modernised: it should include a multiannual strategic approach and a subnational dimension and respect active subsidiarity;

21.

recognises that the European Semester could potentially establish a comprehensive framework to guide the programming and implementation of cohesion policy. Adds that the European Commission and the European legislator initiate many policies in a wide range of areas (energy, climate challenges, crisis anticipation and respect for fundamental rights) which are not always consistent. On the other hand, points out that the partnership agreements under cohesion policy take a place-based approach to bringing together the various measures for achieving the EU’s strategic objectives;

22.

stresses that 54 to 58 % of the total volume of public investment is made by local and regional authorities, which play a major role in developing public infrastructure and services essential for the successful implementation of the European programme;

23.

points out that the link between cohesion policy and the European Semester has already been strengthened for the period 2021-27, to ensure that national and European investments reach their full potential. There are already references to the European Semester in cohesion policy legislation and programmes, and references to programming and implementing cohesion policy in the country reports;

24.

notes, however, that the two processes are not consistent with each other: the European Semester is an annual policy cycle based on dialogue between the Commission and national governments with little attention paid to the specific situations of regions and subnational areas, while cohesion policy is based on multiannual programming, multi-level governance, shared management, partnership and a place-based approach;

25.

calls, therefore, for a modernisation of the European Semester:

26.

firstly, the European Semester should be part of a multiannual strategic approach, encompassing current and future EU policy initiatives and tools. Such an approach would enable better alignment with cohesion policy;

27.

secondly, the subnational dimension should be reinforced in the country reports, thus providing the basis for specific regional and local recommendations;

28.

thirdly, local and regional authorities should be involved (rather than just consulted) in the drafting of the country reports and country-specific recommendations. In this regard, the CoR calls for a code of conduct to be adopted (2);

29.

An approach of this kind, co-constructed, would enable regional and local managing authorities to take ownership of the European Semester;

Strengthening the performance-based approach to consolidate the success of cohesion policy, including by bringing to bear lessons learned from other policy instruments

30.

at the same time, points out that cohesion policy – a structural investment policy - has always been implemented on a strategic, multiannual basis with a view to performance, which is measured with indicators focusing on tangible achievements and the results and impact thereof. It is subject to regular reports and evaluations;

31.

points out that these experiences have led to successive reforms of cohesion policy, including with a view to consolidating a performance-based approach that helps to achieve a satisfactory level of simplification, requiring specific ex-ante or enabling conditions to be met and the creation of a performance reserve or a flexibility allocation that can be mobilised when it comes to the mid-term review, and encouraging the use of performance-based financing models such as ‘financing not linked to costs’ (FNLC) or ‘simplified cost options’ (SCOs);

First avenue to be explored: Does the link between cohesion policy and the reforms need to be strengthened?

32.

takes note of the Commission’s ideas for future cohesion policy programmes to be linked to reforms based on the RRF model. Stresses, however, that many stakeholders in the debate, including some Member States, are expressing serious doubts in this regard; nevertheless, if a modernised cohesion and growth policy were to involve reinforced links between investments and reforms, it would be necessary to ensure the involvement of subnational authorities and the appropriate design of the targets and reforms to be achieved;

33.

points out that the choice of certain milestones in the recovery plans has been inspired by the ‘enabling conditions’ of the current cohesion policy system, such as the obligation to adopt an institutional framework or the establishment of strategic frameworks in various sectors. Therefore calls on the Commission to provide a comprehensive study on this model before making proposals for after 2027. Considers that cohesion policy has already contributed to the implementation of many reforms identified in the national recovery and resilience plans (NRRPs) and that it will therefore be possible to draw on this experience in the future (for example with regard to labour market access and needs/skills mismatches, or when shaping a national multiannual waste management strategy);

34.

points out that, according to the European Court of Auditors (ECA) in particular, the system of payments on the basis of reforms introduced by the RRF still needs to prove that it is appropriate and sustainable. If this system were to be applied to cohesion, it would have to exclude from the scope of the reforms those that have no relationship with the remits of subnational authorities and the kinds of investments they make. The trap already encountered with enabling conditions which penalise proactive regional programmes on the pretext that Member States do not sufficiently meet European requirements and objectives should be avoided;

35.

notes the possibility of including in regional programmes targets and milestones for governance reforms: administrative capacity, partnership, production of subnational statistics adapted to socio-economic contexts. Cohesion policy could be more effective if the local structures were better supported;

Second area to be explored: Should a system of payment by results be introduced?

36.

welcomes the ideas (3) for a broader introduction of a system of ‘payments by results’, whereby payments are made on the basis of milestones (representing a qualitative implementation step) and targets (representing a quantitative implementation step like indicators);

37.

considers the potential benefits of such a system, particularly simplification, cutting red tape, and less need for complex calculations (as is stressed in the previous CoR opinion on ‘Simplification of ESIF from the perspective of Local and Regional Authorities’), in order to put more emphasis on policy objectives, project quality and results. This simplification must also be applied, by regulatory means, to the final beneficiaries, as it is they who are responsible for carrying out the operations that determine whether the goals and targets are achieved;

38.

stresses that the current rules already contain elements that could inform the debate on a possible future ‘pay by result’ system, including the existence of a well-developed and widely-tested set of monitoring and results indicators (definition, calculation of intermediate and final targets/values, etc.). Also draws attention to the possibilities of using FNLC and SCO in the current cohesion policy framework. However, such a system also has drawbacks. A key point to consider is that it should remain possible to support risky, highly innovative projects (that sometimes fail to produce the desired outcome);

39.

calls on the Commission to look at how these possibilities are implemented and to identify the lessons to be learned from this before imposing wider use of this methodology. Points out that the information available suggests that the limited use of FNLC is linked to lack of knowledge and fear of double audits;

40.

points out that when designing FNLC schemes it will be essential to respect the fundamental principles of cohesion. Only a place-based approach, based on the principle of multilevel governance and partnership, can ensure that milestones and targets are established according to the subnational context and are therefore relevant and adapted over time;

41.

believes that the prerequisite for this results-based approach is a common regulatory framework for the European funds, including the EAFRD (or another future rural development fund), with single rules along the lines of the Common Provisions Regulation (2014-20). This would lead to genuine alignment of all European policies, including cohesion policy and the common agricultural policy;

42.

calls for common implementation methods to be applied to the various programmes, whether under direct or shared management, in order to enable cohesion policy to play a full role in the implementation of EU policies and to create genuine synergies;

43.

points out that the implementation of a more results-oriented approach requires better data collection, analysis and evaluation at European, national and regional level (4);

44.

specifies that applying the FNLC model more broadly will require a genuine relationship of trust between the managing authorities, the Commission and the ECA, which means ensuring that the control system is proportionate to the level of risk and the size of the operations, and that it avoids double auditing. Emphasises the need to support beneficiaries and the various authorities as they adapt to this change of model.

In this context, in order to consolidate the success of cohesion policy, it is necessary to modernise the system of budgetary management used by the Commission and the managing authorities, including by applying the lessons learned from other policy instruments

45.

reiterates that the FNLC model must be designed on the basis of milestones and targets geared to the nature of the projects, and that these must be measurable, achievable and able to be time-bound in order to allow regular payments both to beneficiaries and by the Commission;

46.

therefore calls for a higher pre-financing rate for cohesion policy to be introduced. Currently set at 0,5 % per year, it should be increased to 13 % and thus aligned with those of other EU programmes. This would make it possible to achieve smooth payments, ensure regular implementation of the MFF and maximise the leverage effect. It would also facilitate the realisation of financial goals based on the principle of decommitment. Lastly, future cohesion policy must be implemented on the basis of active subsidiarity, with due regard for the principles of decentralisation, multi-level governance and partnership;

47.

stresses the position expressed in the Boc-Cordeiro opinion, to the effect that the current system enables different forms of programmes (regional, interregional, national, multi-fund, etc.) and different roles in programme management (managing authorities, intermediate bodies, etc.) to co-exist, enabling the system to be adopted that is most suited to the institutional frameworks of the Member States. However, the programmes need to be established at the most appropriate subnational level, which for many Member States is the regional level;

48.

stresses that for the partnership principle to be fully implemented, it must be implemented in three dimensions in parallel: horizontally (programme partners); vertically (multilevel governance) and between all (new or existing) EU programmes operating in the same region, particularly those based on Article 174 TFEU;

49.

calls on the Commission to fully integrate the code of conduct on partnership into the future legislative framework for cohesion policy (5);

50.

specifies that partnership should be actively involved from the various drafting stages of programmes (identifying needs, priority areas or financial allocations), during implementation, as well as during monitoring. For example, a partner could act as a monitoring committee member at the appropriate subnational level, to discuss the drafting of calls for proposals, progress reports or evaluation of programmes;

51.

stresses that it is still essential when the management system evolves in any way to support the institutional capacity-building of partners, including small local authorities, through workshops, training and networking structures.

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(1)  Including the opinion on A renewed Cohesion Policy post 2027 that leaves no one behind.

(2)  Opinion on Improving the governance of the European Semester: a Code of Conduct for the involvement of local and regional authorities.

(3)  E.g. Report of the high-level group on the future of cohesion policy.

(4)  Opinion on EU budget and place-based policies: proposals for new design and delivery mechanisms in the MFF post-2027.

(5)  Commission Delegated Regulation (EU) No 240/2014 of 7 January 2014 on the European code of conduct on partnership in the framework of the European Structural and Investment Funds (OJ L 74, 14.3.2014, p. 1).