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Towards a EUROCITIES policy position on the future cohesion policy

Towards a EUROCITIES policy position on the future cohesion policy background for discussion on post-2020 cohesion policy Marton Matko, policy advisor W G CP 26 April 2017 , Brussels. Recent events and developments. Janurary EIB/REGIO barriers to urban investment

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Towards a EUROCITIES policy position on the future cohesion policy

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  1. Towards a EUROCITIES policy position on the future cohesion policy background for discussion on post-2020 cohesion policy Marton Matko, policy advisor WG CP 26 April 2017, Brussels

  2. Recent events and developments Janurary • EIB/REGIO barriers to urban investment • EP REGI hearing M. Lemaitre February • Com Cretu meeting with regional representatives March • EUROCITIES statement on future CP (March) • HLG on ESIF simplification (7 March) • EP REGI EP Urban intergroup: Long-term investment (8 March) • CoR workshop on ITI (15 March) • CoR/AMB metropolitan areas in CP (23 March) • CEMR event on post-2020 CP (28 March) with Katainen • EP REGI own-initiative report (Westphal) vote May • CoR report on post-2020 CP (Schneider) vote May

  3. What is cohesion policy / ESIF? ERDF Cohesion policy Cohesion policy / ESIF is: • An EU wide investment policy to achieve Europe2020 objectives • Solidarity-based policy to reduce development disparities among regions (Article 174 TFEU) • Set of common rules for the 5 funds introduced in 2014-2020 -> ESIF • Close to 45% of the total EU budget (33% cohesion policy, 10% Rural dev) ESF CF EAFRD EMFF ESI Funds

  4. What does cohesion policy aim to achieve? • EU2020 Strategy objectives (5 headline targets) • Employment: 75% of people age 20-64 in work -> boost growth and job creation • Climate and energy: GHG -20% (1990 levels), 20% of energy from renewables, 20% increase in energy efficiency -> transition to a low carbon economy • Research and development: 3% of EU GDP to be invested in R&D • Education: 40% of age group 30-34 with completed higher education, reduce school dropout rate to 10% • Poverty: 20 million less people in or AROPSE -> Tackle poverty and social exclusion • Reduce disparities among regions • more than fourfold GDP@PPS difference between poorest (BG, RO, PL, HU) and richest • Compensate for natural or demographic handicaps • Access to SGEI, reduce isolation in remote areas (islands, mountains, outermost areas)

  5. Where is cohesion policy implemented? Eligibility • All EU regions eligible for funding (272 NUTS2 regions in 28 MS) • Amounts and conditions depend on level of development • Less developed (<75% of EU avg GDP) • Transition (75-90%) • More developed (>90%) • Cohesion Fund eligibility at MS level (90% of EU GDP)

  6. Where is cohesion policy implemented? • Concentrated: half the MS take 90% of budget • Main beneficiaries are large and E-European MS But.. • Enormous differences in per capita support • EE 3.400 vs NL 111 EUR/capita

  7. How does it work? • 7-year programming periods (2014-2020, 2020+?) • Shared management (COM / MS + regions) • COM: adopts partnership agreements (ESIF) and operational programmes and their amendments, follows implementation, pays certified expenditure, reports to EP • MS/Region: launches calls, grants funding, checks expenditure, pays grants, performs audits, monitors progress, evaluates impact • Rules and procedures • EU regulations (CPR+common strategic framework, fund specific), delegated/implementing acts, interpretation (+ guidance) • national regulations, implementing acts • Management and control system (MA/IB, CA, AA)

  8. What is new in 2014-2020? • Thematic concentration • Obligation to devote certain part of budget to priority areas (ERDF TOs -1-4, ESF TO9) • Ex-ante conditionalities • General/sector specific strategy or legislation as precondition • Performance framework • Access to a part of budget linked to achievement of milestones • Integrated approach to territorial development = the urban dimension of cohesion policy

  9. What does cohesion policy invest in? ERDF • Funding structure focused on 11 thematic objectives and 50+ investment priorities Smart growth Sustainable growth Inclusive growth TO1 TO2 TO3 TO10 TO4 TO5 TO6 TO11 TO7 TO8 TO9 R&D ICT SME MOB <CO2 CC ENV ADM EMPL SOCi EDU Thematic concentration ESF CF

  10. Urban and territorial dimension of CP 2014-2020The integrated, place-based approach Why? • to help address territorial challenges in their complexity through CP • to help alignspecific local development needs with the thematic priorities of CP • to promotemulti-level governance (empowerment and cooperation) How? • PLANNING: requesting long-term and integrated urban/territorial strategies • PARTNERSHIP: by fostering horizontal and vertical cooperation (urban-rural, LAGs) • FLEXIBILITY: allowing to combine different sources of thematic funding to support the implementation (ITI, CLLD) • INCENTIVE: earmarking resources in pursuit of these objectives (SUD Article 7) • OWNERSHIP: giving more responsibility to the local level (SUD Article 7, CLLD)

  11. The urban dimension of cohesion policy • Sustainable urban development (ERDF Art 7) • Integrated urban development strategies => ca 800 cities involved • Earmarked funding (min 5%) => 15 billion euros • Delegated powers = cities responsible for project selection • Urban innovative actions (Art 8) • funding for experimentation, 370 m euros, themes linked to urban agenda • First call: 16 of 18 winners are EUROCITIES members • Urban development network • Capacity building, networking and sharing knowledge for Art7 and UIA cities • URBACT • EU-wide learning programme for cities via thematic networks • Territorial instruments • ITI: combining different funding sources to implement integrated strategy • CLLD: to empower local communities to implement their local strategy • “Urban” investment priorities in ERDF TOs • E.g. brownfield regeneration, deprived communities, multimodal urban mobility

  12. There is no single model to implement SUD major EU-wide differences in… • Nature of urban network/ social geography Degree of urbanisation, mono-/policentricity, most pressing urban challenges • Level of decentralisation devolved competencies, local fiscal autonomy • Urban policy traditions e.gPolitique de la ville (FR), SozialeStadt (DE) • Programming constraints (e.g. thematic concentration, OP structure) …have a strong impact on • territorial scope of strategies • Sharing of power across national/ regional/local level (delegation of tasks) • Availability of funding to match development needs, integrated approach Metropolitan area CZ, HR, PL, RO, SK Administrative city (most MS) Neighbourhood FR

  13. If Mondrian and Kandinsky worked for DG REGIOUse of ERDF by type of territory and by territorial instrument Rural areas thinly populated Small urban areas intermediate density ITI 12 bn 6% SUD Art 7 ERDF 14.5 bn 7.8% CLLD 1.1 bn / 0.6% Large urban areas densely populated ERDF 196 billion

  14. Cohesion policy support delivered via ITI ERDF, ESF and CF allocation by MS Programming results 20 MS use ITI 15 MS to deliver SUD 13 MS for other territories Total of EUR 13.8 billion ERDF 11.8 bn ESF 1.7 bn CF 0.3 bn 12 MS use both funds Concentration 80% by 9 MS 28% by PL alone 60% for SUD Article 7

  15. Cohesion policy support to CLLDERDF and ESF allocation by MS • Programming results • 18 MS apply CLLD in CP • EUR 1.8 billion • ERDF 1.1 bn (0.6%) • ESF 0.7 bn (0.8%) • For comparison: • EAFRD 6.9 bn (7%) • EMFF 0.5 bn (9%) • 14 MS use both funds • GR, HU, PL, PT, SE via multi-fund OP • Concentration • 92% by 9 MS • 25% by CZ alone

  16. ERDF support to SUD (Article 7)Share of ERDF budget (%) by MS and delivery mechanism • Half of MS spend more than 7.5% • CY and BG 20%+ • BE 15%+ • RO 11% • IE, FR, LV, CZ, NL, HU, DE 8-10%

  17. Preliminary conclusions: positive results • ITI proved to be a flexible instrument which enables addressing diverse and complex urban and territorial challenges via combining various sources of funding. • SUD (Article 7 ERDF) seems to have met real demand from Member States who allocated 50% more resources than required by the ERDF Regulation. • SUD seems to have provided financial incentive to shift to a metropolitan area approach in urban development in some Member States • ITI used for SUD provides on average twice the scope of thematic funding compared to a priority axis

  18. Discussion on future of cohesion policy • Future of cohesion policy inseparable from the future EU budget (and from the future of Europe) • Lot of uncertainty as regards political priorities, size and time horizon of next MFF • No policy orientations yet from COM • But business as usual scenario very unlikely

  19. Current context Radically different political, social, economic context • Unfavourable global geopolitical developments • Security threats, waves of migration, isolation politics • Poly-crisis in Europe • Lasting effects of financial-economic crisis in large parts of EU • Refugee crisis • Identity crisis (internal divisions, growing populism, Brexit) • New priorities and urgencies to address

  20. Debate on EU budget Principles • EU added value • Flexibility • Performance • Transparency • Simplification Key issues • Need for flexibility • Maximising effectiveness & efficiency (BFOR) • New priorities for spending • Brexit impact • Own resources system • Time horizon (MFF-EP/COM) • Future of EU (EMU budget?)

  21. Prospective timeline for post-2020 cohesion policy Proposal on next MFF CP legislative proposal EP elections Cohesion Forum Cohesion report Brexit negotiations Impact assessment with public consultation Legislative negotiations 2017 2019 2020 2018 2021 Autumn Mar Apr May June 26-27 Statement CP 2020+ Advocacy activities Consolidated policy paper Policy inputs from WGs Publish policy paper

  22. Timeline for policy paper endorsement • Apr 18 First draft sent to WG CP • Apr 26 WG discussion • May 5-19 consultation of draft paper (WG CP, MA, IUD, EDF, SAF) • Week May 22 Consolidating draft • Week May 29 Proofreading, editing • Week Jun 5 To ExCom for approval • Week Jun 19 Excom approval and publication • Jun 26-27 Presentation at Cohesion Forum

  23. Foundations for a policy input Statement on future cohesion policy (March 2017) • CP to remain expression of EU solidarity • Recognition of the growing role of cities • Strengthened partnership principle • Stronger territorial and functional area approach • Simplified rules, subsidiarity, proportionality • Reflection of outcomes of the urban agenda

  24. Main demands from cities • Meaningful involvement in programming (partnership principle, code of conduct) • Easier access to funds for relevant urban challenges • Lifting obstacles to integrated use of funds (single set of rules for ESIF, single fund) • Simplified implementation, more proportionate administrative burden (reporting, audit)

  25. Key issues for debate on post-2020 CP • Objectives/ EU added value • Flexibility • Coverage and eligibility • (Pre-)conditions for funding • Simplification/Management and control systems • Performance • Financial engineering • Territorial dimension

  26. 1. Objectives/ EU added value • Overall objectives of policy and their implications • convergence (focus on lagging/handicapped regions?) • investment for growth and jobs (sustainability, inclusion?) • support implementation of structural reforms (subsidiarity?) • Transfer of innovation in govenance • Improve territorial cooperation • Strategic framework • new EU2020 strategy? Implementation of SDGs? • Thematic concentration? What are the drawbacks for cities? How could it be solved? • Synergies with other EU instruments • H2020, EFSI, COSME

  27. 2. Flexibility Need for flexibility to address urgencies and new challenges. Should this flexibility be created: • within cohesion policy? • Meaning less predictability of funding for long-term objectives or • At the expense of CP as a separate EU budget heading? • Meaning less budget for cohesion policy in general

  28. 3. Coverage and eligibility • Geographic coverage of policy • universal • focused (based on what?) • Eligibility and thematic concentration rules • NUTS2 or lower level?, • GDP/capita only or beyond GDP measures? • Categories of regions should stay? • Thematic concentration rules decoupled from eligibility? • Limitations on types of investment/expenditure for richer regions?

  29. 4. (Pre-) conditions for funding • Ex-ante conditionalities • Current system acceptable? • Stronger link to economic governance / macroeconomic performance? • Funding linked to implementation of structural reforms? • Conditions on funding for cities acceptable? E.g.: • Urban strategy linked to common EU objectives? • Addressing broader geographic areas (urban-rural links) • Use of part of the allocation for citizen/community-led approaches

  30. 5. Simplfication/Management and control systems • Shared or more centralised mgmt (trade-offs) • More proportionate audit and control • Differentiation among MS/regions/OPs (based on what?)

  31. 6. Performance • Increased performance through: • Payments linked to delivery of results? Would cities accept payments conditioned to delivery of results? • Results indicators Can cities undertake impact indicators instead of ones on output? • Delivery Instruments (ITI, CLLD) Are they suited for more efficient delivery?

  32. 7. Financial engineering • Co-financing rates • Are generally lower co-financing rates acceptable for cities? • Could they be used for prioritisation / incentives? • Use of financial instruments • What are the right conditions/ sectors / regions for broader use of FIs? • Link to barriers to long-term investment (national debt calculations) • Should this be under CP or outside? • Repayable grants for some sectors? • Is this a viable alternative to financial instruments?

  33. 8. Territorial dimension Conceptual framework • Better targeting • more sophisticated (NUTS3, urban audit) data better reflecting realities (intraregional disparities, urban challenges) • Recognition, support of new forms of governance and cooperation (FUA, citizen engagement) • Support innovation and local capacity building via cooperation and learning (Interreg, URBACT, UIA)

  34. 8. Territorial dimension • Programming and implementation • Partnership with cities identifying programme priorities. How? • Integrated territorial approach • Earmarking for integrated sustainable urban/territorial development • Urban-rural / Metropolitan cooperation (mandatory/ incentives/ voluntary?) • Use of ITI (mandatory/ incentives/ voluntary?) • Use of CLLD (mandatory/ incentives/ voluntary?)

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