General provisions ERDF - ESF - Cohesion Fund (2007-2013)

As part of the cohesion policy for 2007-2013, this Regulation defines the common rules, standards and principles applicable to the European Regional Development Fund (ERDF), the European Social Fund (ESF) and the Cohesion Fund. It allocates a total of EUR 347 billion, equivalent to approximately one third of the European Union's budget.

ACT

Council Regulation (EC) No 1083/2006 of 11 July 2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund and repealing Regulation (EC) No 1260/1999 [See amending acts].

SUMMARY

The aim of the Regulation is to strengthen economic and social cohesion in order to promote the harmonious, balanced and sustainable development of the European Union (EU) regions for the period 2007-2013. European cohesion policy aims to respond to the challenges linked to economic, social and territorial inequalities, the acceleration of economic restructuring and the ageing of the population.

This Regulation:

• defines the context for cohesion policy (including the Community strategic guidelines for cohesion, growth and employment);
• defines the objectives to which the Structural Funds and the Cohesion Fund (hereinafter referred to as the Funds) are to contribute;
• defines the criteria Member States and regions must meet to be eligible for the Funds;
• defines the financial resources available and the criteria for allocating them;
• defines the principles and lays down the rules on partnership, programming, evaluation, management, monitoring and inspection on the basis of responsibilities shared between the Member States and the Commission.

THREE NEW OBJECTIVES

A total of EUR 308.041 billion was allocated to financing regional policy between 2007 and 2013 to work towards the three new objectives: Convergence, Regional Competitiveness and Employment and Territorial Cooperation. These objectives will supersede the former Objectives 1 , 2 and 3 for the 2000-2006 programming period.

Convergence

The Convergence objective is quite close to the previous Objective 1. It aims to help the least-developed Member States and regions catch up more quickly with the EU average by improving conditions for growth and employment. It covers the Member States and regions whose development is lagging behind. The fields of action will be physical and human capital, innovation, knowledge-based society, adaptability to change, the environment and administrative effectiveness. It will be financed by the European Regional Development Fund (ERDF), the European Social Fund (ESF) and the Cohesion Fund.

The total resources allocated to this objective for this period are EUR 251.163 billion, equivalent to 81.54 % of the total. The following are eligible:

• for the Structural Funds (ERDF and ESF):
• for the Cohesion Fund: Member States whose per capita Gross National Income (GNI) is below 90 % of the European average and which are running economic convergence programmes. They will receive 23.22 % of the resources allocated for this objective. Regions where per capita GNI has risen to above 90 % of the European average (due to the statistical effect of EU enlargement including more deprived regions) will benefit from transitional, specific and degressive financing;
• for specific financing from the ERDF: the outermost regions. The aim is to facilitate their integration into the internal market and to take account of their specific constraints (such as compensation for excess costs due to their remote location).

For this objective, the following ceilings apply to co-financing rates:

• 75 % of public expenditure co-financed by the ERDF or the ESF. The ceiling can be raised to 80 % where the eligible regions are located in a Member State covered by the Cohesion Fund, and even to 85 % in the case of the outermost regions;
• 85 % of public expenditure co-financed by the Cohesion Fund;
• 50 % of public expenditure co-financed in the outermost regions (a new additional allocation from the ERDF to compensate for excess costs).

Regional Competitiveness and Employment

The Regional Competitiveness and Employment objective aims to strengthen the competitiveness, employment and attractiveness of regions other than those which are the most disadvantaged. It must help to anticipate economic and social changes, promote innovation, entrepreneurship, protection of the environment, accessibility, adaptability and the development of inclusive labour markets. It will be financed by the ERDF and the ESF.

The eligible regions are:

• regions which fell under Objective 1 during the period 2000-06, which no longer meet the regional eligibility criteria of the Convergence objective, and which consequently benefit from transitional support. The Commission will produce a list of these regions. Once adopted, the list will be valid from 2007 to 2013;
• all other EU regions not covered by the Convergence objective.

With regard to the programmes financed by the ESF, the Commission proposes four priorities within the European Employment Strategy (EES): to improve the adaptability of workers and businesses, to increase social inclusion, to improve access to employment and to implement reforms in the fields of employment and inclusion.

The resources intended for this objective total EUR 49.13 billion, equivalent to 15.95 % of the total and divided equally between the ERDF and the ESF. Of this amount:

• 78.86 % is intended for the regions not covered by the Convergence objective.
• 21.14 % is earmarked for transitional degressive support.

Under this objective, measures can be co-financed up to 50 % of public expenditure. The ceiling is 85 % for the outermost regions.

European Territorial Cooperation

The European Territorial Cooperation objective aims to strengthen cross-border, transnational and inter-regional cooperation. It is based on the old European INTERREG initiative and will be financed by the ERDF. It aims to promote common solutions for neighbouring authorities in the fields of urban, rural and coastal development, the development of economic relations and the creation of networks of small and medium-sized enterprises (SMEs). Cooperation will be based around research, development, information society, the environment, risk prevention and integrated water management.

13 Regions eligible for funding are those regions at NUTS III level which are situated along internal land borders, certain external land borders and certain regions situated along maritime borders separated by a maximum of 150 km. The Commission will adopt a list of eligible regions.

In the case of networks of cooperation and exchange of experience, the entire EU territory is eligible. The ceiling for co-financing is 75 % of public expenditure.

The resources intended for this objective total EUR 7.75 billion, equivalent to 2.52 % of the total, fully covered by the ERDF. This amount will be distributed between the different components as follows:

• 73.86 % for financing cross-border cooperation;
• 20.95 % for financing transnational cooperation;
• 5.19 % for financing interregional cooperation.

PROVISIONS SPECIFIC TO THE THREE OBJECTIVES

Principles of operation

The Funds will provide assistance which complements national action, including action at regional and local levels. The Commission and the Member States will ensure that assistance from the Funds is consistent with the activities, policies and priorities of the EU and complementary to other European financial instruments.

The objectives of the Funds will be pursued according to multiannual programming and close cooperation between the Commission and each Member State.

Strategic approach

The Council adopts the Community strategic guidelines for Cohesion which define the priorities and objectives of the cohesion policy for the period 2007-2013. They therefore contribute to the coherent and effective implementation of the structural funds

Based on these guidelines, Member States then adopt a national strategic reference framework. This framework therefore serves as the base for programming actions financed by the Funds. It ensures that interventions of the funds are in-line with the strategic guidelines.

Operational programmes

The Member States' operational programmes covered the period from 1 January 2007 to 31 December 2013.Operational programmes deal with only one of the three objectives and receive financing from a single Fund. The Commission appraises each programme proposed to determine whether it contributes to the objectives and priorities of:

• the national strategic reference framework;
• the Community strategic guidelines on cohesion.

Operational programmes relating to the Convergence and Regional Competitiveness and Employment objectives must include:

• justification for the priorities in view of the strategic guidelines on cohesion and the national strategic reference framework;
• information on the priority areas and their specific objectives;
• a financing plan;
• the implementing provisions for the operational programme;
• a list of major projects linked to an operation comprising a set of works, activities or services whose total cost exceeds EUR 25 million in the case of the environment and EUR 50 million in the other fields.

Management, monitoring and inspections

Member States are be responsible for the management and control of operational programmes. They must ensure that the management and control systems are set up in accordance with the provisions of this Regulation. They have to prevent, detect and correct irregularities and recover amounts unduly paid.

The management and control systems of operational programmes set up by Member States must provide for:

• the definition of the functions of the bodies involved in management and control;
• compliance with the principle of separation of functions between these bodies;
• procedures for ensuring the correctness and regularity of expenditure declared under the operational programme;
• reliable accounting, monitoring and financial reporting systems;
• a system of reporting and monitoring where the responsible body entrusts the execution of tasks to another body;
• arrangements for auditing the functioning of the systems;
• systems and procedures to ensure an adequate audit trail;
• reporting and monitoring procedures for irregularities and the recovery of amounts unduly paid.

For each operational programme, the Member State must designate the following:

• a managing authority (a national, regional or local public authority or a public or private body which manages the operational programme);
• a certifying authority (a national, regional or local public authority or body which certifies statements of expenditure and applications for payment before they are sent to the Commission);
• an audit authority (a national, regional or local public authority or body designated for each operational programme and responsible for verifying the effective functioning of the management and control system).

Information and publicity

The Member States and the managing authority for the operational programme have to provide information on and publicise operations and programmes which receive co-financing. The information must be addressed to EU citizens and the beneficiaries, with the aim of highlighting the role of the Community and ensuring that assistance from the Funds is transparent.

BACKGROUND

The other provisions on cohesion policy for the period 2007-2013 are set out in the four specific regulations on:

• the European Regional Development Fund (ERDF);
• the European Social Fund (ESF);
• the Cohesion Fund;
• the European grouping of cross-border cooperation (EGCC).

Politically speaking, the financial basis of the cohesion policy for 2007-2013 is the Interinstitutional Agreement and the Financial Framework for 2007-2013.

SUMMARY TABLE

RELATED ACTS

Commission Decision 2010/802/EU of 21 December 2010 exempting certain cases of irregularity arising from operations co-financed by the Structural Funds and by the Cohesion Fund for the 2000-2006 programming period from the special reporting requirements laid down by Article 5(2) of Regulation (EC) No 1681/94 and by Article 5(2) of Regulation (EC) No 1831/94 [Official Journal L 341 of 23.12.2010].

Commission Decision 2007/766/EC of 14 November 2007 drawing up the list of regions and areas eligible for financing under the Cross-border Cooperation Component of the Instrument for Pre-accession Assistance for the purpose of cross-border cooperation between Member States and beneficiary countries for the period 2007 to 2013 [Official Journal L 310 of 28.11.2007].

Commission Decision 2006/769/EC of 31 October 2006 drawing up the list of regions and areas eligible for funding from the European Regional Development Fund under the cross-border and transnational strands of the European Territorial Cooperation objective for the period 2007 to 2013 [Official Journal L 312 of 11.11.2006].

Commission Decision 2006/597/EC of 4 August 2006 drawing up the list of regions eligible for funding from the Structural Funds on a transitional and specific basis under the Regional Competitiveness and Employment objective for the period 2007-2013 [Official Journal L 243 of 6.9.2006].

Commission Decision 2006/596/EC of 4 August 2006 drawing up the list of regions eligible for funding from the Cohesion Fund for the period 2007-2013 [Official Journal L 243 of 6.9.2006].

Commission Decision 2006/595/EC of 4 August 2006 drawing up the list of regions eligible for funding from the Structural Funds under the Convergence objective for the period 2007-2013 [Official Journal L 243 of 6.9.2006].

Regulation (EU) No 1297/2013 of the European Parliament and of the Council of 11 December 2013 amending Council Regulation (EC) No 1083/2006 as regards certain provisions relating to financial management for certain Member States experiencing or threatened with serious difficulties with respect to their financial stability, to the decommitment rules for certain Member States, and to the rules on payments of the final balance [Official Journal L 347 of 20.12.2013].

The amending regulation provides for two measures:

• For payments made under the European Regional Development Fund (ERDF), the European Social Fund (ESF) and the Cohesion Fund, the EU co-financing rates will be increased by ten percentage points above the usual co-financing rates, to a maximum of 95%. These increased co-financing rates will be applicable to countries under financial assistance at the moment of the entry into force of the regulation, i.e. Cyprus, Greece, Ireland (depending on when it exits its adjustment programme) and Portugal and apply until 31 December 2015. The top-ups do not increase the total appropriations for the affected countries, meaning that no additional EU funding is needed.
• Romania and Slovakia will have an additional year to use the commitments made in 2011 and 2012, meaning that these commitments can be used until the end of 2014 and 2015 respectively (rather than until the end of 2013 and 2014). This is likely to improve the absorption of funding in these countries and responds to an invitation of the European Council of 8 February 2013 to seek a solution to reduce the risk of automatic de-commitment of funds from the 2007-2013 national envelopes of Romania and Slovakia which are affected by the 110% capping in the possible increase of their cohesion allocation for 2014-2020 compared to 2007-2013.

Last updated: 07.03.2014