Overcoming divergences and promoting convergence in the EU

EU cohesion policy regularly adds around 1% to the annual GDP growth in the EU Member States. The effects of its contribution to the European economy cannot be overstated, particularly in the current economic outlook. The EPP Group regards cohesion policy as the primary investment policy covering all Member States and their regions and supporting their development, in particular through its European Regional Development Fund and the Cohesion Fund (so-called EU Structural and Investment or ESI funds).

Thanks to the EPP Group, the EU is set to maintain the current cohesion infrastructure but with several improvements that will make it easier for businesses, entrepreneurs, workers, private individuals and public authorities to benefit from European funding. Already now, the EPP Group and the European Parliament have set the pace on what the rules on future funding after 2020 will look like. For us, it is important that all regions can benefit from funding, that current levels of financing can be maintained, that priorities for disbursing money can be adapted to changing realities and that small businesses, entrepreneurs and locally-driven projects can more easily apply without having to go through complex procedures.

We were equally ambitious with the reform of rules on social and territorial cohesion. The EPP Group insists that all funds aimed at education and training, employment and social inclusion across Europe be merged into a single financial instrument, that more money is given to life-long learning, employability of young people and to measures to fight poverty and social inclusion. Finally, we also laid down a blueprint for funding projects aimed at cooperation between local communities to improve services of general interest that can be used by all the communities involved in the projects, such as funding fire brigades or building hospitals.

The proposed changes should make it easier for EU money to get to where it is most needed in order to provide economic benefit to European businesses, jobs for Europeans and growth to EU countries and their regions.

We expect EU Member States to agree with our demands after the European elections.

We want a modern policy to deliver on economic, social and territorial cohesion

Cohesion policy has proven to be successful and provides results for everyone concerned. Differences in the level of development are narrowing, and accelerated growth of less developed regions has a positive spillover effect on developed regions and vice-versa: investments from and technological progress of more developed regions are helping less developed ones to grow. The most recent economic crisis had, to some extent, halted the process of convergence between the Member States and regions of the European Union, but did not reverse it. Despite the fact that many challenges have arisen since, the process of achieving economic, social and territorial cohesion in the EU has in fact continued, albeit at a slower pace. This is why unshackling EU cohesion policy from too rigid constraints and unnecessary burdens has become a priority for the EPP Group.

The EU is heading into the business end of the discussions on the new Multiannual Financial Framework (MFF). The MFF is a binding budgetary document that reflects a political agreement between all EU countries and among EU Institutions on the maximum level of EU spending over 7 years. While the MFF defines how much will be spent, the reform of the cohesion policy rules define how it will be spent. The EPP Group has already kick-started the cohesion policy reform by decisively influencing the European Parliament position going into the talks with the Council (our co-legislator). We want a modern, future-oriented policy, available to all Member States, and funded in a manner commensurate to the challenges it is facing.

1. Economic cohesion (cohesion for growth)

  • Accelerated growth for the more developed and transition regions, accelerated catching-up for the less developed in the EU

As devised under EPP Group leadership, EU cohesion policy remains not only the main instrument for providing assistance to poorer regions of the EU in order for them to catch up with developed areas, but also significantly strengthens the EU market and stimulates growth. It should cover all regions and not pick and choose more or less deserving ones. At the same time, one of its primary goals should be to reduce disparities between the levels of development of various European regions. In reality, what this means is that all regions should have access to the investments from cohesion funds, but the levels are determined according to their needs with the overall aim of reaching a uniform level of development across the EU.

  • Appropriate funding

In order to be effective, the EPP Group believes that cohesion policy should be sufficiently funded. Any reductions could result in the weakening of the European Union as a whole by removing the beneficial effects on the European economy. In the talks on the new MFF, we will advocate retaining the current levels of funding for cohesion policy (funding for regional and cohesion policy in 2014-2020 amounts to €351.8 billion).

  • Focus and flexibility

EU cohesion policy post-2020, as proposed by the European Commission, espouses a more limited number of priority objectives (this time on a smarter, greener, more connected and social Europe, closer to its citizens). This means the policy should have a clear focus on locally-driven projects that support innovation, digitisation, energy transition, education and access to healthcare in all parts of Europe. However, the EU should be able to adapt at all times to changing priorities and funnelling EU money to where it is most needed. Therefore it is key that cohesion policy allows for money to be reallocated as long as it stays within the ceilings agreed by the MFF and the ceilings allocated to each Member State.

  • Simplification

Low absorption of cohesion funds has been the Achilles heel of cohesion policy in the past. This was partly due to excess red tape and complicated application procedures that were deterring potential applications. As part of the new reform, the EPP Group wants a simplification of the rules to make it easier to apply, easier to qualify for the funds, and make the control procedures lighter for businesses and entrepreneurs benefiting from EU support. We support the Commission proposal to put in place a single rulebook on how to apply for any of the cohesion funds.

2. Social cohesion (cohesion for jobs)

Since 2014, the current EU cohesion policy, as supported by the EPP Group, has already provided funding for a million Small and Medium-Sized Enterprises (SMEs), leading to the creation of 400,000 new jobs. In the same period, programmes like the Youth Employment Initiative (which is covered by the general regulation on ESI Funds) have helped 8 million unemployed find a new job (including 2 million within six months from the completion of training co-funded by these programmes) and another 7 million to find new qualifications. Cohesion policy clearly delivers.

In the new reform for the 2021-2027 period, the EPP Group insists on some improvements in order to make sure that EU funding is more effective. Primarily, we suggest merging all programmes aimed at social cohesion (such as the Youth Employment Initiative) into a single instrument (European Social Fund Plus). The Fund should focus its resources on active policies promoting equal opportunities and guaranteeing access to lifelong learning, from primary education for children to adult education, facilitating matching skills. We insist that after 2020, the share of aid for youth employment increases from 10% to 15% in those countries were many young people are not in employment, education or training and with a clear focus on young people who are the hardest to reach. We also want an increase of the percentage allocated to the fight against poverty and social exclusion to 27%, paying special attention to disadvantaged groups and children and contributing to increased accessibility for persons with disabilities. Finally, we want 3% to be allocated to material assistance and accompanying measures to social inclusion for the most deprived, with a higher level of co-financing by the EU (85%). The ESF+ will allow Member States the flexibility needed to adapt their projects to their own necessities, taking into account regional specificities within and between regions. In practice, Member States will suggest projects and then receive co-financing.

3. Territorial cohesion (cohesion for local and regional communities)

Local and regional communities coming from two or more EU countries can apply for funding from the ERDF via the Interreg instrument, which is also part of the cohesion policy umbrella. The Interreg instrument is aimed at public authorities and finances projects of general interest that can be beneficial for all communities involved, such as fire brigades or hospitals in an international intra-EU context. Its objective is to bring communities closer by financing mutually beneficial projects which otherwise would never have happened without the EU.

In the upcoming reform of the rules on territorial cohesion we insisted on retaining the tried and tested rules so that the geographic peculiarities of municipalities and regions do not play a key role, and we called for keeping the share of Interreg funding within the cohesion policy at current levels (3.3%).

Ball now in the court of EU countries

The reform of the new cohesion policy has already passed the first hurdle in the European Parliament. Under the leadership of the EPP Group, the Parliament set the tone on what the new rules will look like ahead of negotiations with the Member States in the Council. It is our firm belief that cohesion has to remain a flagship EU policy so that the EU can continue providing investment across the board and bring more internal coherence between its Member States and regions. The ball is now in the court of the EU Member States. The EPP Group will fight for a modern, future-oriented and adequately funded cohesion policy.

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