COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT Accompanying the document Proposals for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the European Regional Development Fund and on the Cohesion Fund on a mechanism to resolve legal and administrative obstacles in a cross-border context on specific provisions for the European territorial cooperation goal (Interreg) supported by the European Regional Development Fund and external financing instruments

EN EN
EUROPEAN
COMMISSION
Strasbourg, 29.5.2018
SWD(2018) 282 final
COMMISSION STAFF WORKING DOCUMENT
IMPACT ASSESSMENT
Accompanying the document
Proposals for a
REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL
on the European Regional Development Fund and on the Cohesion Fund
on a mechanism to resolve legal and administrative obstacles in a cross-border context
on specific provisions for the European territorial cooperation goal (Interreg) supported
by the European Regional Development Fund and external financing instruments
{COM(2018) 372 final} - {SEC(2018) 268 final} - {SWD(2018) 283 final}
Europaudvalget 2018
KOM (2018) 0374
Offentligt
1
Table of Contents
1. INTRODUCTION: POLITICAL AND LEGAL CONTEXT............................................................... 4
1.1. Scope and context..............................................................................................4
1.2. Lessons learned from previous programmes...................................................10
2. THE OBJECTIVES ............................................................................................................................ 14
2.1. Challenges for the programmes of the next MFF............................................14
2.2. Objectives........................................................................................................21
3. PROGRAMME STRUCTURE AND PRIORITIES........................................................................... 24
3.1. Subsidiarity and added value of the ERDF and CF.........................................24
3.2. Policy options.....................................................................................................29
3.3. Simplifying and consolidating the priority objectives .......................................39
3.4. Coherence and synergies with other policies .....................................................52
4. DELIVERY MECHANISMS OF THE INTENDED FUNDING ...................................................... 59
4.1. Programming: flexibility for emerging needs, return to "n+2" .......................59
4.2. Enabling conditions and governance...............................................................60
4.3. Simplification ..................................................................................................62
4.4. Financial instruments ("FIs"): simplification and streamlining ......................66
4.5. Performance, flexibility and simplification: conclusions on the new
system of priorities and delivery .....................................................................68
5. HOW WILL PERFORMANCE BE MONITORED AND EVALUATED?....................................... 69
5.1. Monitoring.......................................................................................................69
5.2. Evaluation........................................................................................................74
1. LEAD DG(S), DECIDE PLANNING/CWP REFERENCES............................................................. 76
2. ORGANISATION AND TIMING...................................................................................................... 76
3. CONSULTATION OF THE REGULATORY SCRUTINY BOARD (RSB) .................................... 76
4. EVIDENCE, SOURCES AND QUALITY......................................................................................... 78
2
Figures, maps and tables
Figure 1 - ERDF planned spending by key priorities 2014-20 (EUR bn).......................... 7
Figure 2 - CF Planned spending, 2014-20 (EUR bn)......................................................... 8
Figure 3 - Impact of 2021-2027 ERDF and CF programmes on GDP, 2030................... 18
Figure 4 - ERDF and CF as % of public investment, 2015-2017..................................... 24
Figure 5 - Thematic concentration increases under the preferred option......................... 30
Figure 6 – Impact of the options on EU GDP .................................................................. 31
Figure 7 - GDP impact of the preferred option 3, 2030 and 2040.................................... 32
Figure 8 - Impact of 2020-2027 RTD programmes on EU-27 GDP, 2020-2035............. 52
Figure 9 - What do you see as the main benefit of the performance framework? ........... 70
Map 1 - ERDF eligibility 2014-20 ..................................................................................... 6
Map 2 - Cohesion Fund eligibility 2014-20 ....................................................................... 9
Map 3 - Impact of 2020-2027 regional policy programmes on GDP, 2030..................... 20
Map 5 - Risk factors linked to globalisation and technological change........................... 34
Map 6 - Regional distribution of FP7 expenditure........................................................... 52
Map 7 – RTD component of 2020-2027 ERDF: impact on regional GDP, 2030............ 54
Table 1 – ERDF and CF envelope for 2021-27.................................................................. 5
Table 2 - EU and national contributions to the ERDF, 2014-20 (euro billion).................. 5
Table 3 - EU and national contributions to the CF and ERDF, 2014-20 (euro billion)..... 8
Table 4 - Evaluation lessons: what was addressed in 2014-20, what remains? ............... 13
Table 5 - Links between challenges and policy proposals ............................................... 22
Table 6 - Firms supported and jobs created 2014-20 ....................................................... 28
Table 7 – Comparison of key features of baseline and options........................................ 30
Table 9 - % impact on GDP 2030 and 2040..................................................................... 31
Table 10 - Thematic concentration thresholds ................................................................. 36
Table 11 - EU and national contributions to the ERDF and CF, 2014-20 (euro billion). 37
Table 12 - Proposed priorities in the new period with target indicators .......................... 43
Table 13 - The complementary roles of FP9, COSME and ERDF .................................. 51
Table 14 - Main monitoring data collected for ERDF and CF 2014-2020 ...................... 68
Table 15 - Evaluations planned by Member States 2014-2020........................................ 73
3
Glossary
Term or acronym Meaning or definition
AMIF Asylum and Migration Fund
CEF Connecting Europe Facility
CF Cohesion Fund
Cohesion Policy CF, ERDF and ESF
COSME EU programme for competitiveness of SMEs
CPR Common Provisions Regulation. Will provide common regulations
for all shared management funds (including ESI Funds and AMIF)
DEP Digital Europe Programme
DG REGIO Directorate General for Regional and Urban Policy
EAFRD European Agricultural Fund for Rural Development
EMFF European Maritime and Fisheries Fund
ERDF European Regional Development Fund
ESF European Social Fund
ESI Funds European Structural and Investment Funds – the collective name for
CF, EAFRD, EMFF, ERDF and ESF
ETC European Territorial Cooperation ("Interreg")
EU European Union
EU-13 All Member States that joined the EU since 2004
FI Financial Instrument. In the context of ERDF and CF this will
typically be loan, equity or guarantee.
FP7 and 9 7th
and 9th
EU Framework Programmes for Research and Innovation
GDP Gross Domestic Product
GNI Gross National Income
IA Impact Assessment
ICT Information and communication technology
MFF Multi-annual Financial Framework
OPs Operational Programmes – individual regional or national
programmes for the ERDF.
QUEST Macroeconomic model, used to model impact of ERDF and CF
RIS3 Research and Innovation Strategies for Smart Specialisation
RSB Regulatory Scrutiny Board
Rhomolo Macroeconomic model, used to model impact of ERDF and CF
TEN-E, TEN-T Trans-European Energy and Transport Networks
TO Thematic Objective
4
1. INTRODUCTION: POLITICAL AND LEGAL CONTEXT
1.1. Scope and context
"What should the future EU budget focus on? First, reducing economic and social
divergences between and within Member States is crucial for a Union that aims for a
highly competitive social market economy" (Reflection paper on EU finances1
)
On 2 May 2018, the European Commission adopted its proposals for a new Multiannual
Financial Framework (MFF) for 2021-2027. Under these proposals, the European
Regional Development Fund (ERDF) and Cohesion Fund (CF) will have a budget of
EUR 273 billion over the period. This impact assessment report reflects the decisions of
the MFF proposals and focuses on the changes and policy choices which are specific to
the ERDF and CF.
The mission of the ERDF and CF is laid down in the treaties (see box below): economic,
social and territorial cohesion. This means2
reducing regional and national disparities
across a broad range of themes: innovation, competitiveness, jobs, environment,
transport, education and health infrastructure. It also means cross-border co-operation
and sustainable urban development.
The ERDF and CF are key investment policies in the EU Budget, equivalent in the 2014-
20 programme period to 8.5% of government capital investment in the EU, rising to 41%
for the EU-133
. Both funds contribute to achieving EU objectives, including jobs, growth
and investment, digital single market and Energy Union.
The Treaty basis
Article 174 of The Treaty on the Functioning of the European Union: "The Union shall
develop and pursue its actions leading to the strengthening of its economic, social and
territorial cohesion. In particular, the Union shall aim at reducing disparities between
the levels of development of the various regions and the backwardness of the least
favoured regions".
Article 176: The European Regional Development Fund is intended to help to redress the
main regional imbalances in the Union through participation in the development and
structural adjustment of regions whose development is lagging behind and in the
conversion of declining industrial regions.
Article 177: A Cohesion Fund set up in accordance with the same procedure shall
provide a financial contribution to projects in the fields of environment and trans-
European networks in the area of transport infrastructure.
1
European Commission (2018) "Reflection paper on the future of EU finances" p22
2
European Commission (2017) "7th Report on Economic, Social and Territorial Cohesion" (for links to this and other
reports see Annex 1
3
All Member States that joined the EU since 2004
5
There will be common rules for shared management funds – the Common Provisions
Regulation (CPR). This convergence of rules will enhance coherence and synergies
among the Funds. The CPR will therefore cover the following funds:
 ERDF and CF – the subject of the current impact assessment
 ESF+: European Social Fund +
 EMFF: European Maritime and Fisheries Fund
 AMIF: Asylum and Migration Fund
 ISF: Internal Security Fund
 BMVI: Border Management and Visa Instrument
The other funds have their own impact assessments. This impact assessment satisfies the
requirements of the Financial Regulation in respect of preparing an ex-ante evaluation.
Table 1 – ERDF and CF envelope for 2021-27
ERDF and CF total 273 000
European Regional Development Fund (ERDF) 226 308
 Investment for growth and jobs 215 172
 European territorial cooperation 9 500
 Outermost regions and sparsely populated areas 1 637
Cohesion Fund (CF) 46 692
 of which contribution to CEF Transport 11 285
ERDF – regional development, economic transformation, territorial co-operation
The ERDF was set up in 1975 and provides financial support for regional development,
economic change and transformation, and territorial cooperation. All EU regions are
eligible (see Map 1). Resources are distributed so that the highest aid intensity is in the
less developed regions (see Table 2).
Table 2 - EU and national contributions to the ERDF, 2014-20 (euro billion)
EU amount National
cofinancing
total funding % EU
amount
Less developed 130.3 36.2 166.5 78%
More developed 32.3 29.6 61.9 52%
Northern sparsely populated
and outermost regions
1.6 1.0 2.5 62%
Transition 25.4 10.9 36.3 70%
Interreg 9.8 3.3 13.1 75%
Total ERDF 199.4 80.9 280.3 71%
Less developed regions: those with GDP/head < 75% of the EU 27 average
Transition region: GDP/head between 75% and 90% of the EU 27 average
Eligibility for this period was calculated with UK but without Croatia
Source: ESI fund Open Data Platform - https://cohesiondata.ec.europa.eu/ (February 2018)
6
Map 1 - ERDF eligibility 2014-20
7
Figure 1 - ERDF planned spending by key priorities 2014-20 (EUR bn)
Source: ESI fund Open Data Platform - https://cohesiondata.ec.europa.eu/ (September 20174
)
In line with its broad overall mission (see treaties, above), the ERDF tackles a wide
variety of investment priorities, covering the full range of economic, social and territorial
cohesion (see Figure 1). But in line with the priority for structural adjustment and
economic conversion, nearly half of the money (45%) is invested in smart growth –
research and innovation, ICT and SME support. A further quarter (28%) is invested in
various environmental measures, notably the transition to the low carbon economy.
Three noteworthy priorities are cross-border, transnational and inter-regional co-
operation, the outermost regions and Northern sparsely populated regions.
CF – transport and environmental infrastructure in poorer countries
Since 1994, the Cohesion Fund has supported environmental measures and trans-
European transport and energy networks – particularly high-priority projects of European
interest. The Cohesion Fund may also be used to finance the priorities of the EU's
environmental protection policy. Investment is divided relatively evenly between
transport and energy projects on the one hand and environmental projects (including
energy projects) on the other (see Figure 2).
4
All expenditure data to be updated before publication of the IA. Thematic split will not change significantly, though
implementation obviously will.
Research &
Innovation; 41,1
ICT; 13,3
SMEs; 33,2
Low-Carbon
Economy; 31,6
Climate Change &
risk; 4,2
Environment &
Resource
Efficiency; 18,2
Transport and
Energy, 25.8
Employment,
social and
educational
infrastructure,
21.5
Other; 7,4
8
Eligible countries are referred to in this report as Cohesion Countries (see Map 2). These
are Member States with a Gross National Income (GNI) per inhabitant below 90 % of the
EU average, i.e. the 13 Member States that have joined the EU since 2004, as well as in
Greece and Portugal.
Figure 2 - CF Planned spending, 2014-20 (EUR bn)
Source: ESI fund Open Data Platform - https://cohesiondata.ec.europa.eu/ (September 2017)
Table 3 - EU and national contributions to the CF and ERDF, 2014-20 (euro billion)
EU amount National
cofinancing
total funding % EU amount
CF 63.3 12.1 75.4 84%
ERDF 199.4 80.9 280.3 71%
total 262.7 93.1 355.7 74%
Source: ESI fund Open Data Platform - https://cohesiondata.ec.europa.eu/ (February 2018)
Shared management – a key feature in assessing added value and delivery reforms
The ERDF and CF are delivered under shared management. Programmes are not run
directly by the Commission, instead they are implemented in partnership with the
Member States. The principles and priorities of Cohesion Policy are distilled through a
process of discussion between the Commission and Member States. But day to day
management is in the hands of managing authorities appointed by the Member States.
A managing authority may be a national ministry, a regional authority, a local council, or
another public or private body that has been nominated and approved by a Member State.
They are responsible for efficient management and implementation of a programme.
Low-Carbon
Economy, 8,0
Climate
Change &
Risk, 3,7
Environment
& Resource
Efficiency,
16,9
Transport and
Energy, 32,6
Technical
Assistance,
2,1
9
Map 2 - Cohesion Fund eligibility 2014-20
10
1.2. Lessons learned from previous programmes5
The ex post evaluation of the ERDF and CF6
for 2007-13 found a wide range of
achievements across the fields of economic, social and territorial cohesion, including:
 400 000 SMEs were financially supported and this support led directly to the
creation of 1.1 million jobs. Although this is only 2% of firms in the EU, support
focussed on strategic enterprises – in the manufacturing sector, an estimated 15%
of small firms and over a third of medium sized firms received financial support.
 Transport bottlenecks were removed, travel times reduced and urban trams and
metros supported, often with substantial environmental benefits such as reduced
local air pollution. This included the construction of 4900 km of roads, mostly
motorways (of which 2400 km on the TEN-T). It also included the construction
or upgrading to necessary standards of 2600 km of TEN-T railway.
 The ERDF and CF also made a significant contribution to the environment: a
substantial number of landfill sites which did not comply with EU standards were
closed down while in the Czech Republic, Hungary, Lithuania, Poland and
Slovenia, as well as Croatia, the proportion of waste which was recycled was
increased by over 10 percentage points.
 Investment in social infrastructure led to the modernisation of schools and
colleges in Portugal, benefiting 300 000 children and young people as well as the
upgrading of schools and healthcare facilities in Poland for 1.9 million people.
 Despite the relatively small funding intensity of Interreg cross-border
programmes (EUR 20 per head of population), by end 2013 they had funded over
6800 projects in policy areas which are EU priorities. These included the creation
and expansion of economic clusters, centres of excellence, high education and
training centres, cooperation networks between research centres and cross-border
advisory services for enterprises and business start-ups and joint management
across borders of natural resources, including sea and river basins.
Economic transformation and flexibility
Economic transformation is a treaty mandate of the ERDF (see section 1) and has been a
key mission since its inception. The evaluation noted that the 2007-13 programmes were
implemented in the context of a deep global economic and financial crisis. This strongly
influenced business opportunities and the private investment climate. It also influenced
public finances and the capacity of governments to invest.
5
This section considers lessons learned from the ex post evaluation. Reflections from Council and Parliament, as well
as the 2018 public consultation arguably cover the current period more than the previous period.
6
Ex Post Evaluation of the ERDF and Cohesion Fund 2007-2013
http://ec.europa.eu/regional_policy/en/policy/evaluations/ec/2007-2013/
11
It was crucial for the ERDF to respond to the crisis. Programmes were adapted, EU
cofinancing rates increased and eligibility rules changed to finance working capital – this
last change enabled firms to remain in business and to maintain employment.
The need for economic transformation and a move up the value chain was a key theme in
SME support. A major result of support was helping SMEs withstand the effects of the
crisis by providing credit when other sources of finance had dried up. It enabled SMEs to
invest in modernising or expanding plant and equipment. Moreover, many programmes
used ERDF support not just to survive the crisis, but to experiment and innovate.
Lessons for the content of the policy
Some of the key lessons were linked to the importance of the local business environment
and innovation ecosystem, helping regions move up the value chain. For example:
 Support to large enterprises needs to be very selective, targeting firms which
match the structure of the regional economy and can make links to local
enterprises, research centres and universities. The most effective strategy to
attract large enterprises is not financial incentives but improving local
conditions such as the local business environment, transport and communication
networks, the skills of the local workforce, the social amenities available and so
on. This avoids a wasteful subsidy race.
 Support to SMEs should focus more on helping dynamic SMEs grow, on smart
specialisation strategies and facilitating regions to move up the economic
chain, rather than trying to maintain the economy of the past (see box on
economic transformation).
Other lessons for scope and content included:
 Past ERDF and CF investments in the waste and water sectors mean that fewer
Member States still need work to achieve the acquis requirements.
 It is questionable whether the ERDF should continue to finance road building,
except in the EU13. Similarly airport investments have tended to perform poorly
– only in the outermost regions can a strong case be made.
 Conversely, there is a strong case for investing in local and urban transport
networks, even when they are not part of the TEN-T.
Lessons for delivery
1. The need to have the flexibility to respond to emerging needs. The adaptation of
programmes to the economic crisis was one of the success stories in 2007-13 (see box
above) and should be built upon.
12
2. Simplification: the need to reduce the administrative burden. This was a key and
repeated finding. A narrow majority of stakeholders7
(55%) thought the administrative
burden of project application and implementation too high in relation to funding, with
overcomplex management, control and audits systems. This was the source of
administrative uncertainty, as well as project delays – 62% of those interviewed
considered that the complexity of internal administrative rules and procedures caused
delays in project selection, especially in the EU12 countries.
Complexity was a particular issue in EU15 countries where the funding was relatively
smaller, suggesting a need for proportionality.
3. The need for a greater focus on results, not just spending. There was a strong focus
on investing the money, delivering projects and generating outputs. However, very few
2007-13 programmes had a "focus on results" – setting clear goals for changes at the
level of the region, selecting projects accordingly and tracking progress towards those
goals. Examples included:
 A lack of monitoring of the results sought. For example, all 9 of the financial
instrument case study programmes had a rationale of promoting productivity,
innovation and other aspects of business quality, but only 1 programme (the NE of
England) actually monitored this – the others monitored spending and jobs created.
This lack of strategic tracking meant that projects were often selected more for ability
to absorb funding in a given year than for their contribution to the objectives of the
programme.
 Evaluations which focus on process, not results. The evaluation of the delivery
system found that, in the evaluations conducted by Members States and Managing
Authorities, there was a predominance of process evaluations (44%) and monitoring-
type evaluations (44%) over impact evaluations (22%)8
. Although the lack of impact
evaluations was partly explained by early delays in implementation, this is still
imbalanced.
4. The potential of financial instruments. The evaluation found that these have the
potential to be a more efficient means of funding investment in some policy areas, but the
inexperience of many implementing bodies led to delays in implementation. A further
challenge is spreading financial instruments beyond enterprise support, where over 90%
of 2007-13 financial instrument funding was concentrated.
Addressing the lessons learned
The ex post evaluation of 2007-13 was completed in 2016, while the 2014-20 period was
prepared from 2011 onwards. It was therefore not possible to directly feed evaluation
results into the 2014 reform.
7
The evaluation of the delivery system included a large survey with responses from 2500 stakeholders,
including 1100 programme and intermediate managers, as well as 1400 beneficiaries at the project level
8
Some evaluations covered more than one topic, so figures add to more than 100%
13
Many of the lessons were already clear in implementation and have to some extent been
addressed (Table 4). However, in most cases, while something has been done, the
situation continues to evolve and there is a need to build on previous work. Two clear
particularly clear cases where the challenge is ongoing: the need to respond flexibly to
the challenge of economic transition and the need to simplify and reduce the
administrative burden.
Table 4 - Evaluation lessons: what was addressed in 2014-20, what remains?
Lesson Addressed in 2014-20?
Priorities, e.g. economic
transition (moving SMEs
up the value chain), local
and urban transport
Partially. E.g. smart specialisation strategies provide a focus
on moving up the value chain. Focus on high value added
sectors and interregional cooperation will be reinforced post-
2020 (see section 3.3 and Table 11).
Negative priorities, such
as support for large
enterprises, airports.
Partially. Large enterprise support was restricted to
innovation themes in 2014-20. These issues are further
addressed post-2020 with a list of negative priorities and
exclusions (section 3.3).
Flexible programming
for emerging needs
(including economic
transition)
The ad hoc system of reprogramming worked reasonable well
in 2007-13, so this issue was not formally addressed. But
post-2020, the challenges of globalisation and migration will
be addressed in the thematic priorities (see section 3.3 and
Table 11). Flexibility more generally will be addressed by
proposals for post-2020 (see section 4.1).
Simplification: reducing
the administrative
burden
Partly addressed via a range of elements (including single
audit principle and simplified cost options), estimated to have
reduced the administrative burden on final beneficiaries by 9-
14%. Further simplification is however necessary. These
issues are discussed in detail in section 4.3.
A focus on results, not
just spending
These issues were addressed through the result orientation
and performance framework of 2014-20. This will be
developed further post-2020 by a common set of result
indicators (see section 5).
Broadening the use of
financial instruments
Addressed. The use of financial instruments was broadened
in 2014-20 and more guidance given. However more remains
to be done to make these instruments accessible, simpler to
administer and with more legal certainty (see 4.4).
14
2. THE OBJECTIVES
2.1. Challenges for the programmes of the next MFF
In this section we summarize the main challenges and problems for post-2020 ERDF and
CF based on recent Council, Parliament and Commission reflections, as well as
stakeholder feedback from the public consultation. While the comments cover many
issues, the twin ongoing challenges identified in the evaluation lessons – responding
flexibly and innovatively to the challenge of economic transition, simplification and
reduction of the administrative burden – are a recurrent theme.
Challenges related to scope, priorities and coherence with other policies
In the recent public consultation9
, respondents identified reduction of regional disparities
as the most important challenge (94% of respondents considered it as very or rather
important), followed by reducing unemployment (92%). Promoting economic growth in
the EU, transition to low-carbon economy, fostering research and innovation and social
inclusion were also regarded as key challenges. The respondents considered these
challenges to be successfully addressed by Cohesion Policy.
On the other hand, there are some other challenges which respondent considered to be
only to some extent or not at all addressed by Cohesion Policy, such as globalisation,
common values and sound economic governance and reforms.
The Council set out a view of Cohesion Policy which is forward looking, flexible and
innovative10
: "Cohesion Policy post-2020 must therefore be a proactive, forward looking
policy, which is sufficiently flexible to address new challenges and facilitate the
development of innovative solutions throughout the EU, while continuing to provide a
stable and predictable investment and cooperation framework to reduce the disparities
between the levels of development of the various regions."
Likewise, the European Parliament stresses that Cohesion Policy post-2020 should
remain the main investment policy of the European Union covering all EU regions, in
order to tackle complex socio-economic challenges. It underlined that beyond the goal of
reducing the disparities between levels of development and enhancing convergence as
enshrined in the Treaty, Cohesion Policy should focus on the achievement of the EU’s
broad EU political objectives11
.
The Reflection Paper on EU finances12
details this as:
 Addressing a broad range of economic and social disparities. Reducing economic
and social divergences between and within Member States is crucial for a Union that
aims for a highly competitive social market economy.
9
See Annex 2
10
Council of the European Union "Making Cohesion Policy more effective, relevant and visible to our citizens" 25
April 2017, paragraph 18
11
European Parliament, Resolution of 14 March 2018 on the next MFF: Preparing the Parliament’s position on the
MFF post-2020, paragraph 89
12
https://ec.europa.eu/commission/publications/reflection-paper-future-eu-finances_en
15
 Geographic targeting of funding which goes beyond GDP: "the current system of
allocation of the funds could be revised. New criteria could be added, for instance
linked to the challenges Europe faces, from demographics and unemployment to
social inclusion and migration, from innovation to climate change."
 Tackling the impact of globalisation. While the benefits of globalisation are widely
spread, the costs are often localised. Recent evidence suggests that many regions
across Europe are much more likely than others to be exposed to sudden shocks;
 The low carbon economy: Shift towards new, sustainable growth models that
combine economic, social and environmental considerations in a holistic and
integrated way. This includes investment in low carbon energy generation,
transmission and distribution, in energy efficiency, climate resilience, environmental
protection and will help the EU contribute to the sustainable development goals.
Further key challenges identified in other EU recent documents include:
 Boosting the research, innovation and competitiveness potential of European
regions, as a this is the only sound basis for sustainable growth13
;
 Increasing interregional cooperation and overcoming obstacles to cross-border
interactions of people and firms14
;
 The challenges of urban areas where congestion, unemployment, poverty, inflow of
migrants are concentrated; these challenges require an integrated, tailor-made
approach (“Pact of Amsterdam”15
);
 Challenges faced by EU outermost regions16
(see box).
13
Communication “Strengthening Innovation in Europe's Regions: Strategies for resilient, inclusive and sustainable
growth”, COM(2017) 376
14
Communication “Boosting growth and cohesion in EU border regions”, COM(2017) 534
15
Urban Agenda for the EU - “Pact of Amsterdam”, http://ec.europa.eu/regional_policy/sources/policy/themes/urban-
development/agenda/pact-of-amsterdam.pdf
16
The EU outermost regions are Guadeloupe, French Guiana, Martinique, Mayotte, Reunion Island and Saint-Martin
(France), Canary Islands (Spain), the Azores and Madeira (Portugal)
16
Box: the outermost regions of the EU
Article 349 of the TFEU Treaty acknowledges the special characteristics of the outermost
regions and affords them a special status. In October 2017, the President of the
Commission launched a new strategy for these regions17
.
The outermost regions face serious challenges. Their remoteness, small size,
vulnerability to climate change and (for most of them) insularity represent permanent
constraints on development. Most of them need to invest in basic infrastructure - such as
roads, water and waste management facilities - and their economy depends largely on
imports. All this brings additional costs to their companies, which are primarily SMEs.
As a result, GDP per capita is much lower than the EU average, and unemployment is
critically high, above 40% in the young population.
The new strategy aims at better tackling these challenges, developing smart specialisation
strategies to build on areas such as the blue economy, renewable energy, cooperation
with neighbours and innovation in traditional sectors such as fisheries and agri-food, as
well as supporting the young people. Better air and maritime transport links and better
digital connectivity are crucial.
In order to overcome these challenges, the main issue is prioritisation of the resources of
the ERDF and CF on the right geographic and thematic objectives (see section 3). The
Council stated that "thematic concentration" on innovation, SMEs and green growth
while essential, must be balanced against other needs in the Member States or
region18
: "Thematic concentration … contributing the most to reaching the targets of the
Europe 2020 Strategy… however, a balance must be maintained between the predefined
requirements for concentration on a limited number of thematic areas and the needs of
Member States, including the flexibility to respond during the programming period to
specific national and regional development challenges".
Another challenge is policy coherence among EU instruments. The European Parliament
underlines the need to ensure better synergies and communication between and about the
ESI Funds and other Union funds and programmes, including EFSI, and to facilitate the
implementation of multi-fund operations19
. The Reflection Paper stressed that coherence
between EU funds is needed to ensure that they all support EU objectives and facilitate
reforms in Member States…. Rules and conditions applying in the same policy area
should be aligned. There is also evidence of competition and crowding out effects
between EU programmes20
.
17
Communication “A stronger and renewed strategic partnership with the EU's outermost regions”, COM(2017) 623
18
Council of the European Union "Results and New Elements of Cohesion Policy and the European Structural and
Investment Funds" 15 November 2016, paragraphs 19 and 20
19
European Parliament, Committee on Regional Development, Report on building blocks for a post-2020 EU cohesion
policy (2016/2326(INI), May 2017, paragraph 21
20
Reflection Paper on EU finances, p.23
17
Challenges related to the delivery system
In the public consultation, stakeholders were asked about the main obstacles to achieving
the objectives of Cohesion Policy. Complex procedures were considered by far the most
important obstacle, followed by heavy audit and control requirements, lack of flexibility,
difficulty to ensure financial sustainability and late disbursements/delays in payments21
.
In other words, several issues related to complexity and administrative burden, as well
as the need for flexibility and for sustained funding.
The Council, Parliament and the Reflection Paper on EU finances identified the
following main challenges regarding delivery:
1) Flexibility: the challenge is to make ERDF and CF "more flexible to face new
challenges, for example through an unallocated capacity22
". The recent migration crisis
has shown the need for rapid reaction in the face of a new pan-European challenge.
2) Simplification: the Council considers that “the amount and complexity of rules
introduced for the 2014-2020 programming period remain a challenge for beneficiaries
and Member States. Complex and extensive rules are one of the main causes for errors
and contribute to delays under cohesion policy” 23
. The European Parliament highlights
the need to simplify the Cohesion Policy’s overall management system at all governance
levels, facilitating the programming, management and evaluation of operational
programmes, in order to make it more accessible, flexible and effective.24
;.
3) Governance: the European Parliament considers that there must be a balanced link
between Cohesion Policy and economic governance processes in the European Semester
and that this link should be reciprocal; is of the opinion that a greater recognition of the
territorial dimension would be beneficial for the European Semester25
. According to the
Council, "While the fulfilment of ex-ante conditionalities sometimes requires significant
time and resources to implement legislative changes or complex reforms, they have a
positive effect on the overall investment environment, the strengthening of administrative
capacity and good governance in many Member States." 26
4) The use of financial instruments: the Council called on the Commission to “create
better conditions for the combination of grants and financial instruments and simplify the
implementation of financial instruments by bringing the rules closer to usual financial
market practices”27
.
21
See annex 2 for more details on the public consultation.
22
Reflection Paper on EU finances, p.24
23
Council of the European Union "Synergies and simplification of Cohesion Policy" 15 November 2017, paragraph 10
24
European Parliament, Committee on Regional Development, Report on building blocks for a post-2020 EU cohesion
policy, paragraph 16.
25
Ibidem, paragraph 13.
26
Council of the European Union "Making Cohesion Policy more effective, relevant and visible to our citizens" 25
April 2017, paragraph 7
27
Council of the European Union "Synergies and simplification of Cohesion Policy" 15 November 2017, paragraph 14
18
Expected impacts
If the ERDF and CF continue as at present28
, GDP in the EU is expected to be almost
0.4% higher in 2030 as a result of the interventions. The impact is the highest in the main
beneficiaries of the policy. For example, at the end of the implementation period, GDP in
Croatia and Poland is expected to be 3.2% higher thanks to the ERDF and CF
investments while in Lithuania and Slovakia, it is around 3.0% higher. On average, the
impact in the EU-13 is around 2.7% in 2030.
The impact of cohesion policy is particularly high in the regions which are the main
beneficiaries (see Map 3). By the end of programme implementation (2030), GDP in
Észak-Magyarország and Észak-Alföld (Hungary) is expected to be more than 8% higher
than in a scenario without regional policy.
In the non-cohesion countries ("EU-14" in Figure 3), the impact of ERDF and CF is
smaller but positive for all Member States. This is because the effect of higher taxes to
finance the investment29
concerned is more than compensated by the long term boost in
trade with (now richer) net recipient countries. At the regional level, all regions benefit,
with the smallest impact in 2030 found in Nordjylland (Denmark) and corresponds to
around 0.01% of GDP.
Figure 3 - Impact of 2021-2027 ERDF and CF programmes on GDP, 2030
Source: QUEST
28
Macroeconomic impacts modelled with QUEST and Rhomolo (see Annex). The modelling assumes the status quo,
ie national allocations remain unchanged, as well as the distribution among the various fields of
interventions, but without the UK.
29
The largest element of the EU budget is “GNI based contributions”, which is not straightforward to capture in the
model. Therefore we model an implicit tax on consumption, which mirrors VAT + duties, the second largest
element.
19
A useful measure is the impact per euro spent – the ratio between the cumulated impact
on GDP up to a given year and the cumulated amounts spent up to the same year. Five
years after the end of the programming period, the impact per euro spent is expected to
be around 2.9 euros in the EU-27. Since this impact occurs over a period of 17 years, it
corresponds to an annual average return of around 7%. This represents good value for
money in the public sector but a little below returns on private investments – only to be
expected when a policy has other goals (redistributive, social or environmental) than
simply the highest return.
The above results are in line with impacts of previous modelling work, which suggested
similar impacts (an extra 3% on the GDP of cohesion countries for each period). They
are also in line with counterfactual econometric models which, by comparing regions
with different rates of assistance (notably the richest less developed regions with the
poorest more developed regions, since these are similar) have tended to produce
estimates of between ½ and 1 % extra on growth per year, therefore 3.5%-7% extra GDP
over the period30
.
30
For instance, a paper of Pellegrini et al., Measuring the effects of European Regional Policy on economic growth: A
regression discontinuity approach. Papers in Regional Science, 92, 2013 found an annual per capita difference of
0.6-0.9 percentage points in favour of regions receiving Cohesion Policy support over 1995-2006 period. A paper of
D. Bondonio The impact of varying per capita intensities of EU Funds on regional growth: Estimating dose response
treatment effects through statistical matching, Ex post evaluation of Cohesion Policy programmes 2007-2013, Work
package 14d, came to similar results using propensity score matching.
20
Map 3 - Impact of 2020-2027 regional policy programmes on GDP, 2030
21
2.2. Objectives
The general objective remains that defined in the Treaty: economic, social and territorial
cohesion, reducing disparities between the levels of development of the various regions.
This general objective will comprise 5 policy objectives (see section 3.2 and Table 11):
1. A smarter Europe - innovative and smart industrial transformation
2. A greener, low carbon Europe - clean and fair energy transition, green and blue
investment, circular economy, climate adaptation and risk prevention
3. A more connected Europe - mobility and regional ICT connectivity
4. A more social Europe - implementing the European Pillar of Social Rights
5. Europe closer to citizens – sustainable and integrated development of urban, rural
and coastal areas through local initiatives
Progress towards these policy objectives will be measured:
 On a 3 yearly basis though the Cohesion Report, which examines a broad range
of economic, social and territorial indicators at the national, regional and other
levels, as well as by regular progress reports.
 By a series of common output and (for the first time in the ERDF and CF)
common result indicators. These will be established at the level of the
programmes and aggregated to the European level. The indicators are set out in
Table 11, and further details on monitoring and evaluation in section 5.
To rise to the challenges set in the previous chapters, we are proposing a number of
policy responses falling into two categories (see
22
Table 5):
1. For the content and priorities of the ERDF and CF. A key proposal to reinforce
economic transition – smart growth and a transition to the digital and low carbon
economy. These proposals will be tackled in section 3 on the programme
structure and priorities.
2. For the delivery systems of the policy. Arguably the majority of our proposals,
including more flexible programming, better links with governance and an
increased use of financial instruments. These proposals will be tackled in section
4 on the delivery system.
23
Table 5 - Links between challenges and policy proposals
Challenges (section 2.2) Policy response
Regional disparities remain in terms of a
broad range of economic, social and
territorial themes. Moreover, sustained and
sustainable growth requires a transition to
an innovative and low carbon economy –
this is a challenge for most regions. While
smart growth and a transition to the low
carbon economy should be the main focus,
other themes should still be addressed.
In addition to the challenges faced by
lagging regions, there are specific
challenges and opportunities for the
outermost regions, sustainable urban
development and cooperation.
A reinforced focus on the thematic
priorities of smart growth (including a
transition to the digital economy) and the
transition to the low carbon economy,
while maintaining investment in other
sectors in less developed countries
(section 3.3)
Geographic coverage which continues for
all regions, including specific provisions
for outermost regions, sustainable urban
development and European territorial
cooperation (3.2)
There should be better co-ordination and
synergies between different EU policies.
Clearer demarcation of roles with other
policies, better alignment of rules,
notably within the ESI Fund family (3.4)
Globalisation, economic transition,
migration and other emerging needs mean
that programmes need to respond quickly
More flexible programming, including a
"5+2" system where the last 2 years are
only programmed at the end (4.1)
Shortcomings in administrative capacity and
institutional quality are often key obstacles
to economic, social and territorial progress.
A strengthened and streamlined process
of ex ante conditionalities, better links to
the European Semester (4.2)
Excessive complexity, high administrative
costs/burdens, delays in implementation
Various simplification measures,
including simpler payment systems and
more proportionality in audit (4.3)
High complexity and low take up of
financial instruments
Promoting financial instruments by
simplifying their use, possibility to use
budgetary guarantees via InvestEU (4.4)
24
3. PROGRAMME STRUCTURE AND PRIORITIES
3.1. Subsidiarity and added value of the ERDF and CF
An important point in assessing subsidiarity: the funds are delivered through shared
management (see section 1). This means that the European Commission is a partner at
the strategic level, including programming and financing. But day to day management is
vested in national and regional managing authorities.
In other words, for elements where there is high EU added value (this will be developed
further below) the EU level retains a key role. But in other areas (day to day running, the
selection and management of projects, first level audit, etc) the regional and national
levels run the programmes. There is already an element of subsidiarity baked into the
very nature of the ERDF and CF.
The framework we are using to assess subsidiarity and EU added value
Subsidiarity and EU added value are complementary principles:
 Subsidiarity is the principle that "The EU should not take action unless it is more
effective than action taken at national, regional or local level"31
.
 EU added value is the criterion for determining exceptions to this rule "There is a
clear value added when action at European level goes further than national efforts
could"32
EU added value "requires consideration of the value and improvements which are caused
by the EU rather than another party taking action" (our emphasis)33
. In other words, it
is not primarily a judgement of the absolute value of ERDF and CF actions (for this, see
the elements on evaluation), but rather on the relative value of action at the European
level.
The better regulations guidelines34
identify 3 potential sources of EU added value:
 Effectiveness: where EU action is the only way to get results to create missing
links, avoid fragmentation, and realise the potential of a border-free Europe.
 Efficiency: where the EU offers better value for money because externalities can
be addressed, resources or expertise can be pooled, an action can be better
coordinated.
 Synergy: where EU action is necessary to complement, stimulate, and leverage
action to reduce disparities, raise standards, and create synergies. This can
notably include the promotion of EU goals and policy priorities.
31
Reflection paper on the future of EU finances, p11
32
Reflection paper on the future of EU finances, p12
33
Better Regulations Guidelines tool #42 "identifying the evaluation criteria and questions"
34
Better Regulations Guidelines tool #42 "identifying the evaluation criteria and questions"
25
Effectiveness: where EU action goes further in getting results
That ERDF and CF activities can only be delivered by EU action is relatively easy to
demonstrate for poorer countries and regions. In many countries, Cohesion Policy
represents around 50% (or more) of public investment – these member states would not
have the financial capacity to carry out such investments otherwise (Figure 4). Even in
the poorer regions of richer countries, Cohesion Policy can represent a significant
fraction of public investment.
Figure 4 - ERDF and CF as % of public investment, 2015-2017
Note: Government capital expenditure is the sum of General Government gross fixed capital
formation plus capital transfers, adjusted for any abnormal transfers to banks and other
companies.
Source: Open data platform, Eurostat - Government statistics
Moreover, and as the EU finance paper notes, the nature of the policy is "a redistribution
(coupled with the financing and provision of public goods) through cohesion policy,
which promotes economic convergence as well as social and territorial cohesion"35
. In a
Europe where the more and less developed regions are so unevenly distributed between
countries, such a redistribution has to be organised at a level higher than the national one.
However, there is also evidence of EU added value in more developed member states
and regions. There are effects in terms of innovation and SME support which would not
happen without the ERDF. That added value can be demonstrated in these sectors is
35
Reflection paper on the future of EU finances (p14)
0%
10%
20%
30%
40%
50%
60%
70%
Portugal
Croatia
Latvia
Lithuania
Poland
Slovakia
Estonia
Bulgaria
Czech
Republic
Hungary
Romania
Greece
Slovenia
Malta
Cyprus
Spain
Italy
Germany
Ireland
France
Belgium
United
Kingdom
Finland
Sweden
Austria
Netherlands
Denmark
Luxembourg
26
noteworthy since, as was noted in section 2 above, this is where most of the ERDF
money is invested in more developed regions.
For example, smart specialisation strategies (RIS3) would not exist in most regions,
whether more or less developed, nor would they be maintained, without the ERDF:
 RIS3 hardly existed before they were promoted within Cohesion Policy, and in
60%36
of cases the programmes had an ex ante conditionality to develop or
improve the plan in 2014. As the 7th
Cohesion Report notes37
"Since smart
specialisation became one of the ex-ante conditionalities for the ESI Funds, over
120 smart specialisation strategies have been formulated through partnership,
multi-level governance and a bottom-up approach. EUR 65.8 billion are available
to support these strategies from the ERDF (and EAFRD), in addition to national
and regional funding."
 70% of managing authorities and regional actors believe38
that these are "a
paradigm shift in innovation policy governance" and about 50% of respondents
indicate that recent launches of new policy programmes and measures can be
attributed to RIS3 (only 10% feel there is no influence of RIS3 on new policy
measures).
 Significantly in terms of establishing EU added value, the benefits are seen to be
highest in the Nordic countries, Austria, Germany, Benelux and France. In fact
the highest satisfaction was found in Denmark, Sweden and Finland where 80%
are sure that the benefits outweigh the costs (and none feel costs outweigh
benefits) and 85% believe the process is still gaining momentum.
Furthermore, there is a stabilisation effect at the SME level which has been noted in
all regions. The ex post evaluation of the ERDF and CF39
found that a major result of
support was helping SMEs withstand the effects of the crisis, providing credit when
other sources of finance had dried up:
The ERDF "played a role in helping firms survive the crisis." "The evaluation
found that a major result of support was helping SMEs withstand the effects of the
crisis by providing credit when other sources of finance had dried up… this
enabled firms to remain in business and to maintain employment… a deep
recession may force too much restructuring, too quickly and that the evaluation
does show that support prevented significant job losses in the medium term."
Finally, as the ex post evaluation noted "Interreg is the only policy instrument in its
field. It is therefore crucial for ensuring continuity and linkages of common projects
across borders and (for transnational and EU wide programmes) across the EU"40
. The
reflection paper on EU finances further noted "Cross-border programmes have
36
insert reference
37
7th Cohesion Report, chapter 6.2.4
38
Fraunhofer ISI RIS3 Survey (2017 Results)
39
Commission Staff Working Document "Ex post evaluation of the ERDF and Cohesion Fund" pp4 and 20
40
Commission Staff Working Document "Ex post evaluation of the ERDF and Cohesion Fund", section 7.12 on EU
added value
27
transformed border areas, helping to remove sources of conflict and create new economic
opportunities."41
Added value and the public consultation
In the public consultation, three quarters of respondents considered that Cohesion Policy
programmes effectively add value to a large or a fairly large extent in comparison to what
Member States could achieve alone. The elements of added value most frequently
identified were cross-border cooperation, higher financial support than from national
resources, contribution to reducing regional disparities, policy innovativeness, high
institutional standards of this policy. See Annex 2 for further details.
Efficiency: where the EU offers better value for money
For Cohesion Policy, this is notably when resources or expertise can be pooled or an
action can be better coordinated. The ex post evaluation of the ERDF and CF42
found a
variety of examples of this:
 In various fields, the multi-annual programming and strategic approach of ERDF
provided a focus for interventions over a medium term period. ERDF support
proved decisive for early identification, better financial planning and
complementarity of projects. In particular, the evaluation of transport found that
Cohesion Policy pushed Member States towards long term strategic planning.
 This stable framework led to institutional learning and increased professional
capacity of actors involved in planning and implementing the interventions in
several sectors.
 The various learning platforms such as INTERACT (support for co-operation),
URBACT (for urban programmes) and ESPON (spatial planning) provide a
possibility of pooling expertise. Transnational programmes under Interreg tackle
specific common problems through collaboration, joint research or exchange of
experience and best practice.
 The development of monitoring and evaluation systems. The exchange of
experience and quality control function of the European level (more in section 5)
represents a key source of EU added value.
Moreover, as the Cohesion Report found43
, there are significant potential spillovers
across national and regional boundaries: investments in innovation and SMEs in one
41
Reflection paper on the future of EU finances, p12
42
Commission Staff Working Document "Ex post evaluation of the ERDF and Cohesion Fund", various
28
region or country can (but do not always) spill over borders. There is a role for the EU
level to ensure that such spillovers do not lead to underinvestment44
and indeed that
investments are designed in such a way as to maximise spillovers. This latter point is a
rationale for regional co-operation on smart specialisation strategies.
Synergy and the promotion of EU goals and policy priorities
The ERDF and CF contribute to broader EU policy priorities and goals. This is firstly in
terms of growth – and cushioning the adverse economic and social effects of
economic downturns. The reflection paper on EU finances recognised this by saying
"Investments made under Cohesion Policy in one region or Member State contribute to
macroeconomic stability and increase the growth potential of the Union as a whole."45
The 7th
Cohesion Report found46
that in the long-run, these spill-over benefits represent a
substantial share of the total impact of the policy on the non-cohesion counties
economies. By 2030, the impact of the 2007-2013 programmes is estimated to be around
0.36% of GDP in non-cohesion countries, of which around a third (0.11%) is due to
spillovers from spending in cohesion countries. This effect is particularly pronounced for
Austria and Germany because of trading links. In Austria, more than half the impact of
the policy is due to investment in the cohesion countries.
It also serves as a stabilising factor over the macroeconomic cycle: "The EU budget has
some stabilising effects for some Member States, notably due to its stability over 7 years,
which provides a constant level of investment independent of the economic cycle"47
Secondly, the ERDF and CF contribute to other EU priorities. The ex post evaluation
found that "Cohesion Policy enabled budget limited public authorities to meet EU policy
goals even during the financial crisis. For example it funded infrastructure for water and
waste management to ensure timely compliance with the relevant EU Directives. Further,
it provided incentives for significant shifts in the EU13 and Convergence regions in the
South of EU15 in the disposal of waste away from landfills and towards recycling in line
with the EU policy."
Thirdly, the ERDF and CF address important structural challenges. The ex ante
conditionalities for reform and other links to structural reform will be further outlined in
section 4 below, but 60% of the respondents to the public consultation on the ex post
evaluation of the ERDF and CF said that the ERDF and CF "have provided crucial
support to structural reforms of labour market, transport, environment, energy, education
and social policies and programmes".
43
7th
Cohesion Report, p xvii
44
In line with the economic literature on externalities and sub-optimal investment
45
Reflection paper on the future of EU finances, p12
46
7th
Cohesion Report, chapter 6.3 on the macroeconomic impact of the policy
47
Reflection paper on the future of EU finances, p14
29
Fourth, the ERDF and CF encourage modernisation of administration. This includes
peer to peer and integrity pacts on fair public procurement as well as ex-ante
conditionalities on public procurement and state aid (including training plans).
Finally, they deliver tangible results in areas which matter to European citizens. The
opening lines of the reflection paper say "The EU budget helps to deliver on the things
that matter for Europeans"48
. Helping regions adapt to the challenge of globalisation,
supporting 1.1 million SMEs in the 2014-20 period with 420 000 new jobs as a result,
tackling urban poverty – all these are priorities for citizens. It should be noted (see Table
6) that many of these results are particularly evident outside the cohesion countries.
Moreover, the delivery system via local partnerships – and especially for community led
local development – represents a crucial form of outreach to local people and the local
level which is unusual at the European level.
Table 6 - Firms supported and jobs created 2014-20
FIRMS: All firms Direct jobs created
Cohesion countries 260 000 150 000
Other Member States 840 000 270 000
Total EU 1 100 000 420 000
For context, cohesion country programmes focus on a wide range of actions, whereas
programmes outside these countries focus far more on SMEs and jobs
Source: open data platform
3.2. Policy options
The budget of 273 billion represents a real term reduction of around 10%. For making
this reduction there are essentially 3 broad options:
1. A more or less equal cut across the board – all themes, regions and Member
States face similar reductions.
2. A cut which focusses geographically (e.g. support is maintained in the less
developed, "cohesion" countries, but cut elsewhere).
3. A scenario which focusses on those themes with the highest EU added value and
evidence for impact (e.g. innovation) and reduces funding for those of lower
priority (e.g. transport).
For this reason, four detailed scenarios are considered. A baseline (the current situation)
plus one representing each of the three choices above:
 Baseline. The "status quo", i.e. a continuation of the current regional and
thematic allocations (the only change being the removal of the UK). This scenario
is not realistic for a variety of reasons, including: the reduced cohesion policy
envelope; the relative GDP of different countries has changed (and therefore the
48
Reflection paper on the future of EU finances, p6
30
distribution between them has changed). Nevertheless, it is useful as a baseline
and for comparison purposes.
 Option 1: Reductions across the board, both thematically and geographically.
The reduction is applied in the same proportion everywhere. This option also
includes (of course) an updating of the regional and national allocations in line
with changes in GDP/head. In other words, the same method (see box on Berlin
method) for allocation, but using the latest data and a smaller budget.
 Option 2: Geographic concentration – current levels of expenditure are
maintained in cohesion countries, the reduction falls entirely on more developed
countries. Within each category of country (more or less developed), funding is
distributed according to the usual method, using the latest data. This scenario is a
development of scenarios presented for reflection by the Commission in
February49
.
 Option 3: Thematic concentration – this is the same geographic allocation as
option 1, but the thematic focus on innovation, SMEs and the environment is
increased. This will preserve a critical mass of spending in these areas, while the
cut will tend to focus on infrastructure (notably transport). This is the preferred
option.
Box: The Berlin method and financial allocation
The 1999 Berlin council set a method for financial allocation of cohesion policy,
including ERDF and CF. The method is based mostly on regional GDP/head, with
input from other indicators such as national GNI and population. While the exact
application has evolved, the basic method has remained the same for nearly two
decades.
The Berlin method is familiar to – and understood by – key stakeholders. Retaining
the method brings stability in a time of change. It also responds to the requests of
various stakeholders – including Council and respondents to the public consultation –
to maintain the principles of distribution of funding (see section 2.1 and annex on
public consultation).
49
See COM(2018) 98, Communication "A new, modern Multiannual Financial Framework for a European Union that
delivers efficiently on its priorities post-2020". Option 3 here is based on scenario 3 from the
communication, except that instead of reducing support in non-cohesion countries to zero, it is reduced by
enough to accommodate the overall envelope reduction.
31
Table 7 – Comparison of key features of baseline and options
Baseline Option 1 Option 2 Option 3
ERDF and
CF envelope
Current -10% -10% -10%
Geographic
allocation …
Current
method, using
data available
when the
allocation was
made
Current
method,
updated data
Expenditure maintained in
EU-13, cut in more
developed countries.
Within categories,
distribution by current
method, updated data.
Current method,
updated data
Thematic
allocation
Current Current Current Concentration
on innovation,
SMEs and
environment
Includes the
UK?
Neither as
contributor nor
beneficiary
Neither as
contributor nor
beneficiary
Neither as contributor nor
beneficiary
Neither as
contributor nor
beneficiary
See text for more explanations
The distinctive feature of option 3 is the increased focus on innovation, broadband and
SME support (i.e. the new priority objective 1 – see section 3.3) in option 3. The
thematic concentration criteria of this option mean that spending in these fields goes
from around 30% of total ERDF and CF to around 46% at the EU level.
Figure 5 - Thematic concentration increases under the preferred option
Percentage of spending in the new PO1, former TOs 1-3: innovation, broadband, SME support
Source: DG Regional and urban policy, based on reporting by Member States
The impact of the various options on EU GDP is similar – and positive – over time. The
baseline scenario (not unexpectedly) has the initial advantage in terms of impact, since it
0,0%
10,0%
20,0%
30,0%
40,0%
50,0%
60,0%
70,0%
80,0%
90,0%
RO
BG
MT
EL
PL
CZ
LT
SK
HR
LV
HU
CY
EE
IT
FR
LU
SI
IE
ES
PT
DE
BE
SE
AT
NL
DK
FI
EU-27
Baseline
Option 3
32
represents roughly 10% more money. Interestingly however, in the long term, option 3 of
thematic concentration has greater impact – investment in innovation and SMEs has a
greater long term impact.
Figure 6 – Impact of the options on EU GDP
Source: Quest.
The impact by country depends on factors such as the volume of funding, as well as its
thematic distribution. In 2030 (i.e. just after the end of spending), the scenarios have a
roughly equal impact for the EU27 as a group: the cohesion countries do best under
option 2, while the more developed countries do best under options 1 and 3. However, in
the long term, there is a tendency for cohesion and non-cohesion countries to do better
under option 3, because of the greater long term impact of this option.
Table 8 - % impact on GDP 2030 and 2040
Baseline Option 1 Option 2 Option 3
2030
EU-27 0.37 0.34 0.34 0.34
Cohesion countries 2.01 1.69 2.01 1.74
Non-cohesion countries 0.14 0.15 0.10 0.14
2040
EU-27 0.42 0.39 0.37 0.46
Cohesion countries 2.14 1.81 2.15 2.35
Non-cohesion countries 0.17 0.18 0.12 0.19
Source: Quest – highlight indicates the option (other than baseline) with the highest impact for
those countries
0,0
0,1
0,2
0,3
0,4
0,5
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
Baseline
Option 1
Option 2
Option 3
33
Figure 7 - GDP impact of the preferred option 3, 2030 and 2040
Source: Quest
Pros and cons of the various options
Option 1 (similar cuts across the board) has two key advantages: simplicity and a
sense of fairness. It is relatively easy to apply and does not disturb the balance between
various sectors and different partners. Moreover, it also recognises that all regions
continue to have needs in a changing economy, and that these needs cover a broad range
of sectors.
However, in the context of a significant reduction in real budget, it can hardly be said to
represent a strategic decision. Moreover, experience shows the importance of targeting
and critical mass – both evaluations and experience have tended to drive a certain amount
of thematic concentration, especially in smaller programmes. For these programmes in
particular, in order to be effective with a smaller budget it is necessary to have some kind
of concentration, whether geographic or thematic.
Finally, the world has changed over the years since the last period was prepared. The
challenges of globalisation and technology, migration and the environment have
intensified – it would be odd to maintain the same geographic and thematic focus.
Option 2 (geographic concentration) has several clear advantages:
 The mission of the ERDF and CF is to support regions and countries with the
greatest economic, social and territorial needs – this option has a tight focus on
cohesion countries where these needs are greatest.
0,00
0,50
1,00
1,50
2,00
2,50
3,00
3,50
4,00
DK
NL
FI
SE
AT
DE
IE
LU
BE
FR
IT
SI
ES
PT
MT
HR
HU
BG
CZ
CY
EE
LV
LT
PL
EL
SK
RO
EU-27
2030
2040
34
 Demonstrable EU added value (see section 3.1). This focusses on Member States
which can least afford to pay for such measures (the effectiveness argument), who
have the lowest institutional capacity and therefore the most potential to learn (the
efficiency argument) and where regions tend to be furthest from EU goals and
priorities, such as in environmental standards (synergy argument).
 Redistribution of resources from the most to least developed regions. EU policy
stimulates growth in the latter ones (at least in the short term, through multiplier
effects), which fosters regional convergence.
However, while all of the above arguments demonstrate the need to focus support on
cohesion countries, none of them is an argument against some support in non-cohesion
countries. And in fact, in all the scenarios the bulk of the investment would remain in
cohesion countries.
Moreover, there are also strong arguments for continued support outside of cohesion
countries, including:
 The needs of these regions, including emerging needs such as globalisation and
economic transition, including to the low carbon economy (for more details, see
arguments for option 3 below).
 Added value arguments. This includes innovation and SME support and smart
specialisation strategies, much of which would not happen without the ERDF. It
also includes cross-border spill-over effects, as well as the linkages and
knowledge exchange between lagging and leading regions (for more details, see
arguments for option 3 below and added value section 3.1).
Finally, in the public consultation and elsewhere, very few stakeholders expressed
support for reducing the proportion of spending outside cohesion countries – there seems
to be a strong consensus in favour of the current balance, with a focus on cohesion
countries but significant spending elsewhere. Even the less developed Member States
themselves are not in favour of this option (“Cohesion Policy should remain the policy
for all EU regions with special attention to the less developed ones”50
).
50
Joint Paper of the Visegrad Group, Bulgaria, Croatia, Romania and Slovenia on Cohesion Policy after 2020, March
2017
35
Map 4 - Risk factors linked to globalisation and technological change
36
Option 3 (thematic concentration) – the preferred option
In this scenario, support is maintained in those themes and sectors which have the highest
added value and where evidence of impacts are strongest. For less developed regions, a
case can be made for public investments across the board and administrative
modernisation. But for more developed regions, it makes sense to concentrate funds on
research and innovation, digitalisation, smart transformation and transition to a low
carbon economy – indeed arguments for continuing support to all regions apply mostly to
these themes of intervention, as well as to cooperation and sustainable urban
development:
 The challenges of globalisation and economic transformation increasingly affect
many regions across the EU, including both richer and less developed ones. In
today's fast moving economy, few regions can be said to be beyond risk (and
indeed, most regions have at least one of the key risk factors – see Map 4). This
requires constant investments in the productive base to keep up the pace.
 ERDF support is a key factor behind the development of smart specialisation
strategies in the EU; the added value of these strategies is considered to be
highest in the Nordic countries, Austria, Germany, Benelux and France.
 The contribution to EU priorities, such as structural reforms, climate change, low-
carbon economy and the creation of jobs: 2/3 of the jobs created by the ERDF
and CF, and 3/4 of the SMEs supported, are outside of the cohesion countries.
 Environmental challenges such as air and marine pollution, climate adaptation
and disaster risk management challenges are still present throughout the EU, in
both developed and poorer regions, and often have a cross-border element.
 Urban deprivation and sub-regional pockets of poverty are often found in more
developed regions (and are in fact more concentrated in rich metropolitan
regions).
 Migration is another European challenge, with its impacts concentrated in some,
usually more developed, regions. EU support to the integration of migrants and
refuges is necessary as a sign of European solidarity in all regions.
This is in line with academic literature51
which underlines that various groups of regions
face different challenges and require dedicated policy support. For the most advanced EU
regions and countries, regional policy funds must sustain Europe’s world-class regions in
the face of global competition and support them in moving up the technology-quality
ladder. For the medium level regions, regional policy must help overcome their “middle
income trap”, which involves being too expensive for some activities but not innovative
or productive enough for others, including investments to reinforce the knowledge base
51
S. Iammarino, A. Rodríguez-Pose, M. Storper, Why Regional Development matters for Europe's Economic Future,
DG REGIO Working Paper 7/2017 provides a good overview of recent literature
37
as well as knowledge transfer. For the less developed EU regions, investment support is
needed to overcome their manifold existing barriers to productivity52
.
This option is also in line with requests from stakeholders, including the Council which
supported greater thematic concentration on innovation, SMEs and green growth while
retaining a place for other needs53
: "Thematic concentration … contributing the most to
reaching the targets of the Europe 2020 Strategy… however, a balance must be
maintained between the predefined requirements for concentration on a limited number
of thematic areas and… the flexibility to respond during the programming period to
specific national and regional development challenges".
This flexibility will be provided by a change to the current system, determined at the
regional level. The calculation will be simplified and thresholds established at the
national level (see Table 9) – this makes sense since fiscal capacity (and therefore
considerations of added value in policy objectives 3-5) is mostly determined at the
national level. As can be seen in Figure 6, these thresholds affect many member states,
and the proportion of spending on smart growth will go from around 30% at present to
46% of ERDF and CF in the future.
Table 9 - Thematic concentration thresholds
Type of region Smart growth Green and low carbon
growth
GNI/head in PPS < 75% of EU average 40% 60%
GNI/head in PPS 75% - 100% 50% 70%
GNI/head > 100% of EU average 60% 80%
Smart growth corresponds to the new PO1, green and low carbon to the new PO2
See section 3.3 for more details
Reducing cofinancing rates
EU cofinancing rates increased – and national cofinancing rates decreased – in the 2007-
13 period. This was a response to the financial crisis, to maintain essential investments in
a time of tight public budgets (see
52
Ibidem.
53
Council of the European Union "Results and New Elements of Cohesion Policy and the European Structural and
Investment Funds" 15 November 2016, paragraphs 19 and 20
38
Table 10). Historic levels of EU cofinancing were lower – 50% for the more developed
regions, and less than 75% for the less developed ones.
39
Table 10 - EU and national contributions to the ERDF and CF, 2014-20 (euro
billion)
EU
amount
National
cofinancing
total
funding
% EU
amount
CF 63.3 12.1 75.4 84%
ERDF less developed regions 130.3 36.2 166.5 78%
ERDF transition regions 25.4 10.9 36.3 70%
ERDF Interreg 9.8 3.3 13.1 75%
Northern sparsely populated
and outermost regions
1.6 1.0 2.5 62%
ERDF more developed 32.3 29.6 61.9 52%
Less developed regions: those with GDP/head < 75% of the EU 27 average
Transition region: GDP/head between 75% and 90% of the EU 27 average
Source: ESI fund Open Data Platform - https://cohesiondata.ec.europa.eu/ (February 2018)
EU cofinancing will return to at least historic levels. This is to promote "ownership" as
well as to make the reduced EU contribution go further. Cofinancing rates would be
determined at national level, rather than by region or fund – this makes sense since it is at
the national level that fiscal capacity is determined. It also enables financing flexibility
within a country.
3.3. Simplifying and consolidating the priority objectives
There will be a consolidation of the 11 thematic objectives of 2014-2020 programming
period into 5 objectives (see Table 11 for the objectives and indicators and the box below
for excluded activities). The strength of the current division is that, because of the 11
way split, it is analytical and provides a good level of detail on financial allocations.
However, there have been various signs that a lower level of disaggregation would be
more practical:
 The ex post evaluation noted that the distinction between innovation and SME
support is often artificial and sometimes caused confusion at the programme level
for those tasked with classifying spending.
 Many measures are natural complements – SME support, R&D and IT is an
obvious example, but so are various forms of social spending. Being able to put
them into one priority axis as one objective would make it easier for programmes
to (1) put complementary measures together, exploiting synergies and (2) move
funding flexibly between measures in a given priority, according to needs.
 For reporting, the distinction between various forms of social spending is not easy
to communicate. The same is also true for the various forms of environmental
support and business/innovation support.
The last point is particularly telling, since fine grained reporting is the main advantage of
the 11 way division. But in practice, reporting (eg in the ex post evaluation or cohesion
40
report) often merged the thematic objectives into broader categories, thus negating this
main advantage.
The 5 way division therefore represents a simplification in classification and reporting, as
well as the opportunity to be flexible and exploit policy synergies within the new
objectives. The objectives are expected to be common across the CPR, but here we
discuss them in the context of the ERDF and CF.
Excluded activities
The list of thematic priorities includes a list of "negative priorities" or excluded activities.
These fall into 2 broad categories:
1. Activities which have been evaluated as having low impact or a low cost benefit
ratio or return on investment. Notable examples are support to large enterprises
and to regional airports (except those in the outermost regions). For further
information, see section 1.2 on evaluations and lessons learned.
2. Activities which are not in line with EU priorities. Notable examples are landfill
and fossil fuels (for their negative impact on the environment) and tobacco (fore
the negative impact on health).
The first policy objective is “A Smarter Europe. ERDF support in this field is currently
divided between three thematic objectives: strengthening research and innovation, ICT
and SME competitiveness. This breakdown is artificial as the three are closely related:
post-2020 they will be combined in one priority.
The “Smarter Europe” priority objective will reinforce and expand smart specialisation,
digitalisation, regional and local innovation and entrepreneurial ecosystems. It will also
incorporate the human capital aspects of innovation and entrepreneurship and be based
on smart specialisation strategies.
Since 2014, the ERDF programmes have been based on a smart specialisation approach.
Member States and regions have developed over 120 smart specialisation strategies
which enable, through a bottom-up and partnership approach, to prioritise public research
and innovation investments for the economic transformation of regions. A recent
communication on this topic54
confirms the contribution of smart specialisation to
promoting innovation-oriented growth at regional level. It also identifies directions for
future, including the need to scale-up interregional innovation projects.
The promotion of interregional innovation projects via smart specialisation platforms is a
key tool in promoting EU-wide value chains as well as the diffusion of innovation across
borders. Since 2015, three Thematic Smart Specialisation Platforms have been set up to
54
SWD(2017)264, Strengthening Innovation in Europe's Regions: Strategies for resilient, inclusive and sustainable
growth
41
foster inter-regional cooperation in the field of energy, agri-food and industrial
modernisation. Around 100 regions take part in 20 partnerships covering issues ranging
from smart sensor systems in agri-food to innovative textile, from industry 4.0 to solar
energy. Building on these experiences, the Commission is testing approaches for scaling-
up post-2020.
The approach in "Smarter Europe" is complementary to other EU instruments such as
FP9 since it focusses on regional relevance, i.e. local capacity, local ecosystems and local
uptake, while FP9 focusses on European excellence (for more, see section 3.4 on
coherence and synergies below).
The second priority objective is “A green and low carbon Europe” covering support to
the low carbon and climate resilient economy, including energy efficiency, renewable
energy, smart grids and reinforced efforts to engage citizens and communities in the
energy transition. ERDF and CF support in this area is important for achieving goals of
the new 2030 policy framework on energy and climate. Transition to clean energy
provides new business opportunities, cleaner environment and health benefits for
citizens. At the same time, it also requires significant changes in Europe's economies. It
comes with a social cost linked to the move away from traditional sectors (e.g. coal) and
a need for significant investment in electricity generation, networks and energy
efficiency, estimated at some EUR 200 billion annually in the next decade55
. Due to the
existing market failures, support from the EU budget remains necessary for a part of this
investment. In particular, EU support is frequently needed to untapped energy efficiency
potentials.
The effects of energy transition and climate change are unevenly dispersed in the EU. A
number of regions in Poland, Czech Republic and Germany face challenges in their
energy transition, due to large volumes of solid fuel production and the high share of
solid fuels (primarily hard coal and lignite) in their electricity generation mix56
. Climate
change affects all EU regions but to varying degrees, with the south of Europe most
severely affected. The potential for wind and ocean energies is higher in coastal regions
and for solar energy in the southern regions. They also represent a sustainable solution
for energy-self-sufficiency in many island and outermost regions. For these reasons,
targeted measures from the ERDF will be needed post-2020 in all regions. Different local
circumstances often do not allow for one-size-fits-all solutions. Cohesion policy offers
placed-based solutions and is particularly well suited to mobilise the relevant energy
transition actors on the ground.
A greener Europe also covers investment in environmental infrastructure, circular
economy, blue economy and climate change adaptation. Environment is one of the two
CF fields of intervention set in the Treaty. There remain gaps to comply with the acquis
in the waste, water, seawater, air quality and nature areas, especially in less developed
Member States and regions. For instance, total needs for sewerage collection systems and
treatment plants under the Urban Waste Water Treatment directive57
are estimated at
55
COM(2015) 80, SWD(2016) 394
56
Eurostat, January 2018
57
Council Directive 91/271/EEC of 21 May 1991
42
EUR 49 billion. And Member States will have to invest in the transition towards a
circular economy as outlined in the Circular Economy Action Plan58
(and in its related
initiatives for example the Communication Waste to Energy59
, the European Strategy for
Plastics in the Circular economy60
, etc.) and to reach the more ambitious recycling
targets set by the newly EU waste legislation.
In fact, it is important that any future investments under all priority objectives, but
notably in infrastructure with lifecycles of significantly over 20 years, must be resilient to
protect assets and infrastructure from climate risks (including sea-rise levels or heavy
storm events) if we are to avoid damage to infrastructure or lock-ins. This could build on
strengthened climate-proofing guidance for major projects, covering both climate
resilience and greenhouse gas emission reductions, applied also to other relevant
programmes and financial instruments.
The third policy objective is “A more Connected Europe” covering investment in
European, national and regional transport networks and digital connectivity. Investment
in trans-European transport networks (TEN-T) is one of two fields of intervention of the
Cohesion Fund. However, support from the ERDF for regional transport infrastructure is
also needed, especially in less developed regions, in order to fulfil the existing gaps in
regional networks, improve links to the TEN-T and TEN-E network, and to deploy low-
carbon transport systems and technologies.
Digital connectivity has become one of the decisive factors for closing economic, social
and territorial divides. The digitisation of European industry but also the modernisation
of sectors like healthcare, education and public administration depend on networks.
Connectivity creates new markets and a growth environment for SMEs, supports the
modernisation of local economies and increases the capacity of labour market to adapt to
new challenges even in disadvantaged areas. Digital solutions like e-health and smart
mobility not only improve lives of citizens but also significantly reduce the costs of such
services, depending however on the universal access to high capacity digital networks.
The fourth policy objective is “A more social Europe”. While this policy objective is
covered mainly by ESF investment, the ERDF will continue providing support to social,
health and educational infrastructure and to integration of migrants (see section 3.4 for
complementarities with other EU policies in this field).
The fifth new policy objective is “Europe closer to citizens”. This new policy objective
will cover sustainable and integrated development of urban, rural and coastal areas
through local initiatives. This would give enhanced visibility to urban issues and deliver
on the Amsterdam pact61
. Previously spread (somewhat artificially) across various
58
COM(2015) 614 final
59 COM(2017) 34 final
60 COM(2018) 28 final
61
Agreed in 2016, the Amsterdam Pact outlines the Urban Agenda for the EU and lays out its key principles
http://ec.europa.eu/regional_policy/sources/policy/themes/urban-development/agenda/pact-of-amsterdam.pdf
43
themes, this consolidation places citizens' needs at the heart of the investments. It also
enables integrated approaches, influenced by local and urban authorities.
Interreg post-2020
Building on the success of previous Interreg programmes (see above), we are proposing
an evolution along the following lines:
 Crossborder programmes should change from primarily managing and
distributing funds toward acting as institutions of exchange, facilitating cross-
border activity and being a centre for strategic planning.62
 The addition of co-operation outside the EU. This will take the form of (1) a
specific strand for outermost regions (2) the incorporation of current IPA/ENI
funding to support enlargement and cooperation with neighbourhood countries.
Interreg will continue to be able to draw on all of the priority objectives (where
appropriate) and although funded by ERDF will be covered in an ETC regulation.
European cross-border mechanisms
The impact and European added value of Interreg programmes are well recognised (see
main text). However, in many cases cross-border barriers (especially in relation to health
services, labour regulation, local public transport and business development) stem from
differences in administrative practices and national legal frameworks. In fact, it has been
estimated that if 20% of existing legal and administrative obstacles across internal EU
borders were addressed, border regions would gain 2% in GDP63
.
These administrative obstacles are difficult for programmes to address alone, requiring
decisions beyond programme structures. Therefore in 2015 the Luxembourg Presidency
and several Member States explored the use of one Member State's rules in a neighouring
Member State64
.
The Commission proposes to facilitate such solutions with an "off-the-shelf" legal
instrument. Since the action is voluntary and optional, being used (or not) at the initiative
of Member States concerned, it respects subsidiarity and proportionality. It also has no
62
Territorial impact assessment of 14 March 2018. The full report will be available at:
http://cor.europa.eu/en/activities/Pages/tia-documents.aspx.
63
European Commission (2017) "Boosting growth and cohesion in EU border regions"
http://ec.europa.eu/regional_policy/en/information/publications/communications/2017/boosting-growth-and-
cohesion-in-eu-border-regions
64
Input paper for the Informal Ministerial Meeting on Territorial Cohesion under the Luxembourg Presidency,
see: http://www.amenagement-territoire.public.lu/fr/eu-presidency/Informal-Ministerial-Meetings-on-
Territorial-Cohesion-and-Urban-Policy-_26-27-November-2015_-Luxembourg-City_.html# ; see also
SWD(2017) 307, Point 3.9, p. 49-50.
44
cost incidence for the EU budget.
The instrument offers two options: a European Cross-Border Commitment ("ECBC")
(which itself enables derogation from normal rules65
) or a European Cross-Border
Statement ("ECBS") (signatories undertake formally to legislate to amend normal
rules66
). The mechanism will:
 Remain voluntary: Member States have the option to select the mechanism or use
other effective mechanisms to resolve legal border barriers.
 Focus on intra-EU land borders, while allowing Member States to also apply the
mechanism to maritime and external borders.
Cover joint projects for any item of infrastructure with impact in a cross-border region or
any service of general economic interest provided in a cross-border region.
Under each objective, it is possible to invest in administrative capacity to deliver that
policy objective. As noted in the ex post evaluation and 7th
Cohesion Report, ERDF and
CF is not only about money, but also about know-how and good governance. This is a
long term investment and should be a priority for cohesion policy post-2020, including
such actions as:
 Peer to peer learning, exchange of good practices.
 Professionalization of fund management, development of competencies.
 Public procurement: guidance, studies, exchange of good governance practices,
strategic procurement.
 State aid: training, seminars, expert support.
 Anti-fraud and anti-corruption, including integrity pacts.
65
For reasons of parliamentary primacy, legal certainty and transparency, most Member States will need to
adopt up-front a formal Parliamentary act to empower the executive authorities to sign an ECBC.
66
Where a Member State decides not to adopt up-front the formal Parliamentary act set out above.
45
Table 11 - Proposed priorities in the new period with target indicators
 These are common priorities across the CPR – in some cases (notably 4.1 and 4.2) other funds will lead, with ERDF or CF as support only.
 Within each specific objective, it is possible to support operations in favour of (a) improving institutions and governance and (b) cooperation with
partners outside the programme area.
 In the context of shared management, targets will be set by managing authorities
Policy Objective Specific Objective Common output indicators Common result indicators
1. A smarter
Europe -
innovative and
smart industrial
transformation
1.1 Enhancing innovation
capacity
RCO 01 - Enterprises supported (of which: micro, small,
medium, large)
RCO 02 - Enterprises supported by grants
RCO 03 - Enterprises supported by FIs
RCO 04 - Enterprises with non-financial support
RCO 05 - Start-ups supported
RCO 06 - Researchers working in supported research
facilities
RCO 07 - Research institutions participating in joint
research projects
RCO 08 - Nominal value of research and innovation
equipment
RCO 10 - Enterprises cooperating with research
institutions
RCR 01 - Jobs created in supported entities
RCR 02 - Private investments matching public
support (of which: grants, FIs)
RCR 03 - SMEs introducing product or process
innovation
RCR 04 - SMEs introducing marketing or
organisational innovation
RCR 05 - SMEs innovating in-house
RCR 06 - Patent applications submitted to EPO
RCR 07 - Trademark and design applications
RCR 08 - Public-private co-publications
1.2 Reaping the benefits
of digitalisation for
citizens, companies and
governments
RCO 12 - Enterprises supported to digitise their products
and services
RCO 13 - Digital services and products developed for
enterprises
RCO 14 - Public institutions supported to develop digital
services and applications
RCR 11 - Users of new public digital services and
applications
RCR 12 - Users of new digital products, services
and applications developed by enterprises
RCR 13 - Enterprises reaching high digital intensity
RCR 14 - Enterprises using public digital services
46
1.3 Enhancing growth and
competitiveness of SMEs
RCO 15 - Capacity of incubation created RCR 16 - High growth enterprises supported
RCR 17 - 3-year old enterprises surviving in the
market
RCR 18 - SMEs using incubator services one year
after the incubator creation
RCR 19 - Enterprises with higher turnover
1.4 Developing skills for
smart specialisation,
industrial transition and
entrepreneurship
RCO 16 - Stakeholders participating in entrepreneurial
discovery process
RCO 17 - Acquisition of know-how for smart
specialisation and industrial transition (million euro)
RCR 24 - Staff supported to gain know how for
smart specialisation and industrial transition
RCR 25 - Value added per employee in supported
SMEs
2. Low carbon
and greener
Europe - clean
and fair energy
transition, green
and blue
investments,
circular economy,
climate
adaptation and
risk prevention
2.1 Promoting energy
efficiency measures
RCO 18 - Households supported to improve energy
performance of their dwelling
RCO 19 - Public buildings supported to improve energy
performance
RCO 20 - District heating network lines newly
constructed or improved
RCR 26 - Annual final energy consumption (of
which: residential, private non-residential, public
non-residential)
RCR 27 - Households with improved energy
performance of their dwellings
RCR 28 - Buildings with improved energy
classification (number) (of which: residential,
private non-residential, public non-residential)
RCR 29 - Estimated GHG emissions
RCR 30 - Enterprises with improved energy
performance
2.2 Renewable energy
through investments in
generation capacity
RCO 22 - Additional production capacity for renewable
energy (of which: electricity, thermal)
RCR 31 - Total renewable energy produced (of
which: electricity, thermal)
RCR 32 - Capacity for renewable energy connected
to the grid/ operational
2.3 Smart energy systems
- smart grids low and
medium voltage and
related storage
RCO 23 - Digital management systems for smart grids RCR 33 - Users connected to smart grids
RCR 34 - Roll-out of projects for smart grids
47
2.4 Climate change
adaptation, risk
prevention and disaster
resilience
RCO 24 - New or upgraded disaster monitoring, warning
and response systems
RCO 25 - Coastal strip, river banks and lakeshores, and
landslide protection newly built or consolidated to protect
people and property
RCO 26 - Green infrastructure built for adaptation to
climate change
RCO 27 - National/ regional/ local strategies addressing
climate change adaptation
RCO 28 - Areas covered by protection measures against
forest fires
RCR 35 - Population benefiting from flood
protection measures
RCR 36 - Population benefiting from forest fires
protection measures
RCR 37 - Population benefiting from protection
measures against natural disasters (other than floods
and forest fires)
RCR 38 - Estimated average response time to
disaster situations
2.5 Water efficiency RCO 30 - Length of new or consolidated pipes for
household water connections
RCO 31 - Length of sewage collection newtorks newly
constructed or consolidated
RCO 32 - New or upgraded capacity for waste water
treatment
RCR 41 - Population connected to improved water
supply
RCR 42 - Additional population connected to at
least secondary waste water treatment
RCR 43 - Water losses
RCR 44 - Waste water properly treated
2.6 Circular economy -
investments in waste and
resource efficiency
RCO 34 - Additional capacity for waste recycling RCR 46 - Population served by waste recycling
facilities and small waste management systems
RCR 47 - Waste recycled
RCR 48 - Recycled waste used as raw materials
RCR 49 - Waste recovered
2.7 Green infrastructure
in urban environment and
reduced pollution
RCO 36 - Surface of green infrastructure in urban areas
RCO 37 - Surface area of habitats supported to attain a
better conservation status (of which: NATURA 2000,
other)
RCO 38 - Surface area of rehabilitated land
RCO 39 - Systems for monitoring air pollution installed
RCR 50 - Population benefiting from measures for
air quality
RCR 51 - Population benefiting from measures for
noise reduction
RCR 52 - Rehabilitated land used for green areas,
social housing, economic or community activities
48
3. A more
connected Europe
- Mobility and
regional ICT
connectivity
3.1 Digital connectivity RCO 41 - Additional households with broadband access
of very high capacity
RCO 42 - Additional enterprises with broadband access of
very high capacity
RCR 53 - Households with broadband subscriptions
of at least 100 Mbps
RCR 54 - Enterprises with broadband subscription
of at least 100 Mbps
3.2 Road TEN-T and
regional and local
mobility
RCO 43 - Length of new roads supported - TEN-T
RCO 44 - Length of new roads supported - other
RCO 45 - Length of roads reconstructed or upgraded -
TEN-T
RCO 46 - Length of roads reconstructed or upgraded -
other
RCR 55 - Users served by improved road traffic
RCR 56 - Time savings due to improved road traffic
3.3 Rail TEN-T (and
inland waterways?),
intermodal regional
RCO 47 - Length of new rails supported - TEN-T
RCO 48 - Length of new rails supported - other
RCO 49 - Length of rails reconstructed or upgraded -
TEN-T
RCO 50 - Length of rails reconstructed or upgraded -
other
RCO 51 - Length of new or upgraded inland waterways -
TEN-T
RCO 52 - Length of new or upgraded inland waterways -
other
RCO 53 - Railways stations and facilities - new or
upgraded
RCO 54 - Intermodal connections - new or upgraded
RCR 57 - Length of ERTMS equipped railways in
operation
RCR 58 - Annual number of passengers on
supported railways
RCR 59 - Freight transport on rail
RCR 60 - Freight transport on inland waterways
49
3.4 Sustainable
multimodal urban
mobility
RCO 55 - Length of tram and metro lines- new
RCO 56 - Length of tram and metro lines- reconstructed/
upgraded
RCO 57 - Environmentally friendly rolling stock for
public transport
RCO 58 - Dedicated cycling infrastructure
RCO 59 - Alternative fuels infrastructure (refuelling/
recharging points)
RCO 60 - Cities and towns with new or upgraded
digitised urban transport systems
RCR 62 - Annual passengers of public transport
RCR 63 - Annual users of new/ upgraded tram and
metro lines
RCR 64 - Annual users of dedicated cycling
infrastructure
4. A more social
Europe -
European Pillar
of Social Rights
4.1. Well-functioning
labour markets and
welfare systems
RCO 61 - Annual unemployed persons served by
enhanced facilities for employment services
RCR 65 - Job seekers using annually the services of
the employment services supported
4.2 Socio-economic
integration and
marginalised
communities, migrants
and disadvantaged groups
RCO 63 - Capacity of temporary reception infrastructure
created
RCO 64 - Capacity of rehabilitated housing - migrants and
refugees
RCO 65 - Capacity of rehabilitated housing - other
RCR 66 - Occupancy of temporary reception
infrastructure built or renovated
RCR 67 - Occupancy of rehabilitated housing -
migrants and refugees
RCR 68 - Occupancy of rehabilitated housing -
other
4.3 Reducing inequalities
- access to education and
training
RCO 66 - Classroom capacity of supported childcare
infrastructure (new or upgraded)
RCO 67 - Classroom capacity of supported education
infrastructure (new or upgraded)
RCR 70 - Annual number of children using
childcare infrastructure supported
RCR 71 - Annual number of students using
education infrastructure supported
50
4.4 Equal opportunities -
health care and social
services
RCO 69 - Capacity of supported health care infrastructure
RCO 70 - Capacity of supported social infrastructure
(other than housing)
RCR 72 - People with access to improved health
care services
RCR 73 - Annual number of persons using the
health care facilities supported
RCR 74 - Annual number of persons using the social
care facilities supported
RCR 75 - Average response time for medical
emergencies in the area supported
5. Europe closer
to citizens -
integrated urban
and territorial
development
5.1 Integrated social,
economic, cultural and
environmental
development and security
in urban areas
RCO 74 - Population covered by strategies for integrated
urban development
RCO 75 - Integrated strategies for urban development
RCO 76 - Collaborative projects
RCO 77 - Capacity of cultural infrastructure supported
RCR 76 - Stakeholders involved in the preparation
and implementation of strategies of urban
development
RCR 77 - Tourists/ visits to supported sites
RCR 78 - Users benefiting from cultural
infrastructure supported
5.2 Integrated social,
economic, cultural and
environmental
development, including
for rural and coastal areas
RCO 80 - CLLD strategies for local development
Horizontal -
Implementation
Administrative capacity
and efficiency
RCO 95 - Staff financed by ERDF and Cohesion Fund RCR 91 - Average time for launch of calls, selection
of projects and signature of contracts
RCR 92 - Average time for tendering (from launch
of procurement until signature of contracts)
RCR 93 - Average time for project implementation
(from signature of contract to last payment)
RCR 94 - Single bidding for ERDF and Cohesion
Fund interventions
51
Horizontal - ETC ETC indicators RCO 81 - Participants in cross-border mobility initiatives
RCO 82 - Participants in joint actions promoting gender
equality, equal opportunities and social inclusion
RCO 83 - Joint strategies/ action plans developed or
implemented
RCO 84 - Joint pilot activities implemented in projects
RCO 85 - Participants in joint training schemes
RCO 86 - Joint administrative or legal agreements signed
RCO 87 - Organisations cooperating across borders
RCO 88 - Projects across national borders for peer-
learning to enhance cooperation activities
RCO 89 - Projects across borders to improve multilevel
governance
RCO 90 - Projects across national borders leading to
networks/clusters
RCR 79 - Joint strategies/ action plans taken up by
organisations at/after project completion
RCR 80 - Joint pilot activities taken up or up-scaled
by organisations at/after project completion
RCR 81 - Participants completing joint training
schemes
RCR 82 - Legal or administrative obstacles
addressed or alleviated
RCR 83 - Persons covered by joint agreements
signed
RCR 84 - Organisations cooperating across borders
6-12 months after project completion
RCR 85 - Participants in joint actions 6-12 months
after project completion
RCR 86 - Stakeholders/ institutions with enhanced
cooperation capacity beyond national borders
52
3.4. Coherence and synergies with other policies67
The common provisions regulation (CPR) covering the ESI Funds family has created a
convergence of rules which has already borne fruit. However, a recent study68
shows that
the stakeholders still see many overlaps in EU funding of various policy areas, especially
between ESI funds and other EU instruments. The study also notes a high degree of
(perceived) complexity of the funding portfolio of EU instruments and differences of
rules and processes between funds. The study recommendations include:
 Further alignment of rules with other ESI funds.
 Clearer demarcation of roles with related thematic areas such as FP9, COSME,
CEF, Digital Europe, LIFE and AMF.
There will be a common set of rules for ESI Funds, in a defined set of areas such as
programming and financial management (in a successor to the CPR, "common provisions
regulation"). This will include many of the general proposals for delivery set out in
chapter 4, notably as regards simplification. Common rules should continue to allow
investments combining complementary aspects such as investment in people (financed
by the ESF+) and in social infrastructure (financed by the ERDF).
Overlaps within the ESI Funds family create a situation of competition between funds
("double guichet") and represent a source of additional complexity for final beneficiaries.
The following demarcation lines have been agreed:
 Investments in large infrastructures, including for broadband, could be solely
supported by ERDF, while the EAFRD and EMFF would still support small
infrastructures with a clear local relevance.
 Business development in rural and coastal areas will move to the ERDF, except
where it is linked to agricultural and forestry production or farm household
income (for the EAFRD) or to complementary activities related to fishing or
aquaculture (EMFF).
 In rural areas, nature conservation action (Natura 2000) will be dealt with
exclusively by EAFRD. However, to avoid gaps the ERDF will still be able to
finance this outside rural areas (and notably in peri-urban areas).
A key challenge, given the focus on smart specialisation, is coherence with the FP9
programme and COSME. In the current 2014-20 period, Horizon 2020 is investing
EUR 77 billion on research and innovation, and the ERDF some 41 billion. COSME is
the EU programme for competitiveness of SMEs, with a budget of EUR 2.3 billion.
While many initiatives have been implemented in the current period at all levels
(strategic, programming, operational) to improve synergies and complementarities, for
the post-2020 period there is still much un-exploited and under-exploited R&I potential
67
InvestEU is covered in section 4.4 on Financial Instruments
68
KPMG and Prognos, Coherence, complementarity and coordination between policy objectives and implementation
mechanisms in the context of ESI Funds, study for DG REGIO
53
across the EU. The differentiation will be "European excellence" (the goal of FP9),
"competitiveness" (COSME) and "regional relevance” (the goal of the ERDF)69
.
Table 12 - The complementary roles of FP9, COSME and ERDF
FP9 European excellence – the generation and
exploitation of new knowledge. This is
usually in a few key regions – although the
situation is evolving, just 4 regions70
received
20% of FP7 in 2007-13 and 50% of the
money was spent in regions representing just
one-sixth of the population.
FP9 will continue to focus on
leading edge research and
innovation, strengthening the
European Research Area and
reforms to the research and
innovation system.
COSME Competitiveness, promoting the uptake of
specific solutions for larger groups of SMEs.
COSME will focus on
competitiveness of enterprises, of
SMEs, making strategic use of SME
intermediaries such as clusters.
ERDF Regional relevance – diffusion of existing
knowledge and technology to places that
need it, embedding it locally via smart
specialization strategies. The Rhomolo model
estimates that ERDF investment in RTD will
have a similar impact to FP9 (both around
0.15% of EU GDP in 2030 – see chart and
FP9 IA) but precisely in those regions where
FP7 had the least impact (see Map 5 and Map
6).
ERDF will invest via smart
specialization strategies in the
diffusion and adaptation of
knowledge and technology to all
regions in Europe. These broader
smart specialization strategies,
including improvement of local
innovation systems, will become an
ex ante conditionality in the new
period.
All 3 funds will work together to enable the flow of knowledge, facilitating transnational co-
operation, partnership in international research and innovation networks. Complementarities will
also be reinforced through an alignment of relevant rules.
The "seal of excellence" (SOE) concept will be reinforced and projects which cannot, due to lack
of budget be funded by FP9, may be picked up by ESIF funds and funded under the same
conditions (including for state aids) as FP9.
69
"From Rivalry to Synergy: R&I Policy and Cohesion Policy" insert reference
70
Île de France, Oberbayern, London and Comunidad de Madrid
54
Figure 8 - Impact of 2020-2027 RTD programmes on EU-27 GDP, 2020-2035
Source: RHOMOLO
Map 5 - Regional distribution of FP7 expenditure71
71
We will update to an initial mapping of 2014-20 once figures are released in May
55
56
Map 6 – RTD component of 2020-2027 ERDF: impact on regional GDP, 2030
57
Trans-European transport networks projects will continue to be financed from the
Cohesion Fund via both shared management and the direct implementation mode under
the Connecting Europe Facility (CEF). EUR 11 billion of the Cohesion Fund will be
transferred to the CEF for this purpose. Co-ordination with the CEF will include:
 A simple demarcation, where the CEF will focus in particular on the core network
and the ERDF and CF on ensuring that the comprehensive network, including
ensuring regional and local access to the network.
 Alignment of approaches, including alignment of eligibility criteria, coherent
conditionality and a clear view on the project pipeline across multiple
instruments.
 Maximising synergies between transport, energy and telecommunications sectors,
to promote smart, low-emission and safe mobility (e.g. energy infrastructure,
alternative-fuels, connected and autonomous vehicles) which should be deployed
in pan-European way.
 In the area of broadband, reinforced ERDF support to ensure the rollout of digital
networks in view of covering all territories throughout the EU, including rural,
isolated, and sparsely populated areas. The ERDF would focus on areas where
more severe market failures are observed and where higher intensity grants are
required to render the network deployment viable. CEF would cover areas where
milder market failures are encountered to render a network deployment viable.
CEF would also support strategic digital projects, for example the deployment of
5G corridors.
The new Digital Europe Programme focuses on deployment and capacity building in
key digital areas at European level, in order to promote global competitiveness through
digital transformation. All five areas covered (cybersecurity, digital transformation of
industry, digital transformation of Services of Public Interest, high performance
computing and advanced digital skills) have a clear regional impact. An alignment will
be made with EU initiatives in this field, such as the Digitising European Industry
initiative72
, necessary to complete the digital single market; and with eGovernment
Action Plan and Tallinn Ministerial Declaration on eGovernment73
, both related to the
modernisation of public administration and digital transformation.
Synergies will be ensured with the LIFE programme for Environmental and Climate
Action, in particular through LIFE strategic integrated projects, to optimise the uptake of
funds supporting environmental investments. ERDF and CF may fund activities that
complement LIFE projects, as well as by promoting the wider use of solutions, methods
and approaches validated under LIFE (inter alia, including investments in green
infrastructure, energy efficiency, eco-innovation, ecosystem-based solutions, and the
adoption of related innovative technologies).
Regarding migration-related challenges, all Cohesion Policy Funds will address long-
term needs linked to integration, while the Asylum and Migration Fund will focus on
72
https://ec.europa.eu/digital-single-market/en/policies/digitising-european-industry
73
https://ec.europa.eu/digital-single-market/en/news/ministerial-declaration-egovernment-tallinn-declaration
58
shorter term needs. AMIF will mainly support actions in the early stage of integration
and with a focus on 3rd
country nationals, while the ERDF will target more general
longer term measures, notably development of infrastructures, social housing and
measures touching entrepreneurship. The ESF will complement these investments with
softer long term integration measures.
On security, synergies will be sought on the protection and securisation of public spaces,
transport hubs and other critical infrastructure, cybercrime and the prevention of
radicalisation. The Internal Security Fund (ISF) will mainly focus on supporting
information exchange and operational cooperation between law enforcement authorities.
In relation to infrastructure, the ISF will support immediate security needs and innovative
actions which do not require heavy investments. The ERDF may invest in security
infrastructure in regeneration of deprived communities. The ERDF may complement
border management interventions under the integrated border management fund (IBMF)
with infrastructure for border crossing points (eg transport facilities including roads).
Finally, EU macro-regional and sea basin strategies, which aim at better coordination
of policies and funds in a specific geographical area, represent an effective tool for
increasing coherence and synergies with other policies.
59
4. DELIVERY MECHANISMS OF THE INTENDED FUNDING
4.1. Programming: flexibility for emerging needs, return to "n+2"
The shared management system of the ERDF and CF is based on a programme agreed
between the Member State and the Commission at the beginning of the period. In the
current 2014-20 period, this programme allocates funding by priority for the full 7 years.
There is a trade-off between stable long term planning (a foundation of ERDF and CF
success, smart specialisation strategies being a notable example) and the flexibility to
respond to new developments and emerging needs. Although there is some flexibility in
the current system – for example the ability to transfer up to 10% of funding between
priorities towards the end of the period – circumstances have proved that more flexibility
is needed.
The economic crisis in the 2007-13 period, migration events and the ongoing challenge
of technical changes – all of these challenges require the ability to respond flexibility and
effectively.
In future there will therefore be a 5+2 programming system: only the first 5 years'
funding will be programmed. The remaining 2 years will be assigned to the national
envelope and programmed in a midterm review.
Performance framework targets will be set for 2024, for the last 2 years new targets will
be set in the context of the reprogramming exercise. There will be no performance
reserve. Instead, the programming of the last 2 years' allocation will take into account:
1. Whether the weight of the priorities (or their existence) still holds after the 4th
year of implementation. Priorities will be confirm or adjusted in the light of
emerging needs, changing circumstances and relevant CSRs (see below).
2. Progress towards performance targets.
In the current period, spending is subject to an n+3 rule. These rules mean that 3 years
after the year money is allocated, if it is not spent it will be decommitted. While a certain
"grace period" is necessary to programme and implement complex programmes, it was
noted in earlier chapters that there is considerable delay at the beginning of programmes,
as well as "overhang" of previous programmes.
In order to correct this issue, we are proposing programming which catches up to n+2
by the end of the period. This catch up should be possible because of administrative
simplifications in programming and payments proposed below.
60
4.2. Enabling conditions74
and governance
The effectiveness of public investments and the durability of results depend on suitable
conditions. Unsound policy frameworks and regulatory, administrative and institutional
weaknesses are major systemic obstacles hindering effective and efficient public
spending. It is therefore of the utmost importance that such weaknesses are identified and
addressed at the beginning of the programming period75
.
This is why a key reform of the ESI Funds for the 2014-2020 programming period was
the introduction of ex ante conditionalities (ExAC). These are sector-specific or general
preconditions that needed to be met at an early stage of programme implementation and
by the end of 2016 at the latest (see box).
What are enabling conditions and ex ante conditionalities?
A precondition for programmes. In the current round of the ERDF and CF they are called
"ex ante conditionalities" (ExACs) and fall into five broad categories76
:
1. Improving the investment environment in the EU. Many ExACs address
horizontal and sector-specific barriers that hinder investment.
2. Supporting structural changes and implementation of country specific
recommendations (CSRs) under the European Semester process.
3. Accelerating the transposition and implementation of the EU acquis, e.g. in public
procurement, state aid, environment, non-discrimination, gender and disability.
4. Better targeting of support from ESI funds and other public funds. For example,
via a needs analysis or strategic policy documents.
5. Improving administrative capacity and coordination.
Around 75% of all applicable ex ante conditionalities were fulfilled at the time of
adoption of the 2014-20 ESI Fund programmes. For the non-fulfilled ones, over 800
distinct action plans were included in the programmes77
.
Post-2020, ExACs will be simplified, streamlined and renamed "enabling conditions".
A review of the ex ante conditionalities78
found that they helped set the conditions for
programme success. In their absence, reforms might not have happened or happened at a
much slower pace. However several lessons were learned:
74
Building on "Ex ante conditionalities" in the 2014-20 period
75
See for example OECD Recommendation on Effective Public Investment Across Levels of Government adopted on
March 12, 2014.
76
Commission Staff Working Document (2017) 127 final "The Value Added of Ex ante Conditionalities in the
European Structural and Investment Funds"
77
The final deadline for reporting by Member States is end June 2017 in the framework of the Annual
Implementation Report for 2016 and end August 2017 in the framework of the Progress Report. The Commission
assesses completion of the ExAC action plans on the basis of reporting by Member States.
61
 There were too many of them. There will therefore be far fewer enabling
conditions. One key tool to reduce their number is to tightly focus on those that
have the most impact on the effectiveness of ERDF and CF support. These would
usually be strategies or framework tools directly related to ERDF and CF
interventions (for example a smart specialisation strategy). The other key tool is
to avoid enabling conditions:
o Which repeat existing legal obligations.
o Which Require Member States to revise recently submitted documents.
o Where other tools are more appropriate, such as programming priorities,
project eligibility criteria or administrative capacity measures.
 There were too complex. In future, fulfilment criteria shall be few, clear,
tangible and measurable – and with a clear link to programme success. This
means no more administrative capacity elements (such as training).
 They were set at the beginning of the programme and not revisited – the
assessment was a one off exercise. There will be follow-up across the period.
For example, strategic documents should be reflected in project selection criteria,
enabling conditions could be monitored on the ground or the subject of
evaluations.
Governance
The ERDF and CF will be more closely aligned with the European Semester of economic
policy coordination, which will also reinforce its regional dimension. The detailed
analysis of Member States' challenges in the context of the European Semester will serve
as a basis for the programming of the funds at the start and at mid-term of the next
period. This will serve as the roadmap for the short, mid- and long-term planning and
monitoring of the funds.
In supporting the country specific recommendations (CSRs) stemming from the
European semester process, it is important to ensure better alignment – currently there
are few investment related CSRs and those which do fall into this category tend to be too
vague to be operational. Alignment will be promoted:
 At the programming stage: Member States will identify relevant CSRs from the
latest two years (2019 and 2020), to include in the programmes.
 At annual review meetings: CSR progress will be discussed between Commission
and Member State (and at monitoring committee meetings) as part of the annual
policy dialogue.
78
Commission Staff Working Document (2017) 127 final "The Value Added of Ex ante Conditionalities in the
European Structural and Investment Funds"
62
 At the 5+2 review stage: as outlined above, this will take account of CSRs of
years 2023 and 2024 at the performance review in year 5.
 Member States will estimate upfront the % funding addressing CSRs per specific
priority and this could be tracked via payment claims. This will enable estimation
of how much funding is going to various CSRs.
This will lead to transparency and accountability in addressing CSRs through ERDF and
CF. Moreover, through the European Semester process the Commission and the Member
States (notably through their National Reform Programmes) will ensure coordination and
complementarity of financing from cohesion policy funds and the new Reform Support
Programme with regard to the support to structural reforms.
Conditionality linked to the rule of law (i.e. justice system) will be dealt with in a
separate regulation concerning various EU policies and instruments (and not only
Cohesion Policy). The issue of rule of law goes beyond Cohesion Policy and a separate,
cross-cutting regulation enables a common approach across the various relevant policies
and instruments.
Macroeconomic conditionality (i.e. linked to the Stability and Growth Pact) is
maintained but will be streamlined. They will also be refined and made smarter, to avoid
aggravating the economic situation by cutting investments in time of crisis.
4.3. Simplification
The 2014-2020 programmes have already seen various simplification measures,
including:
 Common principles for ESI Funds in terms of strategic planning, eligibility and
durability, complemented with fund specific rules;
 Introduction of e-Cohesion principle, ensuring exchanges of information between
beneficiaries and programme by electronic data exchange systems;
 Proportional control and audit procedures, with a single-audit principle;
 Extended use of simplified cost options (SCO) to reimburse eligible expenditure:
flat-rate financing, standard scales of unit costs and lump sums.
 Simpler rules for revenue-generating projects, including flat rates.
These measures brought a reduction of ERDF and CF administrative costs for managing
authorities by 4-8% and a reduction of administrative burden on final beneficiaries by 9-
14%79
.
However, further simplification is necessary:
79
t33 & Spatial Foresight, Use of new provisions on simplification during the early implementation phase of ESIF,
Final Report, June 2017
63
 There is evidence of substantial administrative costs, estimated in a recent study80
at 3% of average programme costs for the ERDF and 2.2% for Cohesion Fund.
The administrative burdens on beneficiaries are even higher. Complex procedures
also lead to delays – and a focus on procedure at the expense of results.
 In the public consultation linked to this proposal, some 80% of respondents
considered complex procedures as an obstacle preventing funds from achieving
their objectives.
 The High Level Group on Simplification of Cohesion Policy (see box) found a
number of elements which could be improved.
Key recommendations of High Level Group on Simplification of Cohesion Policy81
 Alignment of rules between EU Funds: Cohesion Policy funds should not receive
more restrictive treatment than similar projects under central EU management.
 Fewer, clearer, shorter rules: replacing current 600 pages of regulations and 5000+
pages of guidelines. Shorter, more strategic texts of programmes.
 Genuine subsidiarity and proportionality: reliance on national public expenditure
procedures to a much larger extent.
 A stable yet flexible framework: no need to re-appoint institutions for the next
programming period. Programmes should also be modified more easily.
 Single audit principle: extension of the single audit principle, each level of control
builds on the preceding one. Additional checks needed if Member State or regions
have serious deficiencies.
There is however a trade-off: the current delivery mechanism is strong in assuring
legality and regularity: detailed rules ensure compliance with applicable legislation,
fiduciary risk, fraud detection, financial control, risk monitoring etc82
. The focus on
regularity is the main driver of rules, procedures and controls – regularity can only be
ensured if the rule is sufficiently clear.
The following measures will promote simplification while still maintaining a sufficient
focus on legality and regularity.
A key simplification is moving further away from payments based on expenditure –
the classic payment method of the ERDF and CF. This method can impose a heavy
burden, since expenditure "often consists of a multiplicity of small items incurred by
small beneficiaries. As a result, national administrations complain about the resources
needed to verify boxes of documents and timesheets, while beneficiaries are at a loss to
understand why they must reimburse money to the EU for participants’ bus tickets long
80
Spatial Foresight & t33, New assessment of administrative costs and burden in ESI Funds, preliminary results.
81
Full text of the High Level Group recommendations:
http://ec.europa.eu/regional_policy/sources/newsroom/pdf/simplification_proposals_key.pdf
82
EY, Effective and efficient delivery of European Structural and Investment Funds investments – Exploring
alternative delivery mechanisms, to be published in 2018Link to ADM study
64
after the ink has faded on those tickets. Failure to ensure that the necessary verifications
take place can lead to unacceptably high rates of error and, consequently, the necessity
to interrupt and suspend payments to the Member States. Implementation of the
necessary corrective actions, ensuring legal, regular and eligible spending of the funds,
can lead to Operational Programmes being blocked for up to several years"83
.
To reduce this burden, the regulations will:
1. To extend the scope of simplified cost options ("SCOs").
In this system, instead of reimbursing actual expenditure item by item, payment is based
on flat-rate reimbursement, standard scales of unit costs or lump sums. Such measures
are being already being used for around 4% of the budget in the 2014-20 programmes.
Managing authorities84
appreciate SCOs for their simplicity and reduction of
administrative burden, but are apprehensive about the risk and uncertainty of moving to
this new system. They also request further support.
SCOs will be encouraged by simplifying rules and calculation methods, providing more
off-the-shelf options and making them compulsory for small amounts. Extending the use
of simplified cost options for the ERDF/CF could substantially reduce total
administrative costs, even by 20-25% in an ambitious scenario85
. Other advantages
related to the use of SCO include a reduced rate of errors and irregularities.
2. To introduce a new option: payments based on conditions.
This makes payment conditional on results/outputs or even policy actions or processes. It
represents a radical simplification, moving completely away from checking invoices. A
study undertaken for the Commission86
recommended testing this system in the ERDF
and CF, since it has the potential to reduce the administrative burden, especially on
beneficiaries. It also changes the focus from costs and reimbursement to tracking results
and as such represents good practice elsewhere (such as the World Bank’s Programme
for Results87
).
However, the study also noted that this approach has potential pitfalls:
 It is crucially dependent on having clear and trackable indicators for the
conditions, and on the monitoring system more generally. While the monitoring
and evaluation system of the ERDF and CF is already good and is being further
improved (see section 5), this means that the system would only apply in sectors
where appropriate indicators could be found.
 It depends on national audit and assurance systems to make it work (see 4.3
below on proportionality).
83
DG EMPL (2015) Simplified Cost Options in the European Social Fund, Promoting simplification and result
orientation.
84
Source: DG Regio survey of managing authority views on SCOs. Replies were received from 208 of 295 OPs,
representing 77% of the total ERDF-CF budget.
85
Spatial Foresight & t33, op.cit. preliminary results
86
See budget support study in sources
87
EY, op.cit.
65
 It may make EU contributions and actions less visible.
To gather more information, the approach is being tested in the framework of the
omnibus for some types of ERDF investment, such as energy efficiency (see box). It will
then be offered as an option to programmes in the new period, and their proposals will be
discussed with the Commission in the preparation of programmes.
Box: Payment based on conditions – case of energy efficiency
The Commission is developing together with Member States a pilot scheme of
payments based on the fulfilment of conditions in the field of energy efficiency. Under
this scheme, the conditions for payments would be the calculated savings in energy use
or in CO2 emissions resulting from the improved energy performance. The financing
conditions would be proposed by Member States; the Commission would assess them
and modify operational programmes to include the payments based on conditions
schemes; payment by the Commission would occur once the financing conditions have
been fulfilled, or intermediate steps ("milestones") reached.
The advantage of such an approach is twofold: on the one hand reduced administrative
cost, on the other a much keener focus on results.
In addition to simplified cost options and payments based on conditions, there will be a
series of simplification measures including:
1. Simplified programming at the start of the programme: The main strategic
document for ESI Funds at national level, Partnership Agreement, will be much
shorter. Similarly, the text of operational programmes will be “lighter”, focusing on
achievement of objectives and funds allocations. The intervention logic is also
expected to be simplified, focused on broad policy objectives and European specific
objectives. There will be no performance reserve. The number of ex-ante
conditionalities will be lower. These changes are expected to shorten substantially the
start-up phase.
2. Simplified designation of authorities. The CPR for 2014-2020 period includes a
complex procedure of designation of managing, certifying and audit authorities88
.
Designation was meant to obtain assurance regarding the adequate setup of
management and control systems, prior to first payments. This process has proven to
be heavy and time consuming, especially for audit authorities. For post-2020, systems
would largely be "rolled over" to the next programming period, without requirement
for programmes to undergo a new full-fledged designation process. Assurance would
still be obtained by early systems audits. Roll over is expected to contribute to a
speedier start of the next programming period.
88
Art.123-124 of the CPR.
66
3. No specific rules for revenue generating programmes: Currently the CPR has
rules for projects which generate revenue89
. These rules are in addition to State aid
rules and aim to avoid over-financing, but are cumbersome in application: a study of
implementation in 2014-2090
found that even small simplifications of rules for
revenue-generating projects bring greater administrative cost reductions than
expected. The main advantage of these rules is to avoid over-financing, but this can
be achieved more simply and easily by a decrease in EU co-financing rates (see
chapter 3). Specific rules on revenue generating investments will therefore be
eliminated, though of course, state aid rules will continue to apply. The measure is
expected to reduce total administrative costs by some 1%91
.
4. No specific rules for major projects. Following intensive work by JASPERS and
Commission in the 2014-2020 period, the quality of major project administration has
increased substantially92
in many countries. The main challenge now is to extend the
analysis to flagship projects in sectors such as R&D/innovation which, while
strategically important, often fall below cost thresholds. The process is replaced by
"projects of strategic importance" – the monitoring committee themselves will be
responsible for identifying and following flagship projects, reporting on progress and
results. More upstream work will be encouraged and Jaspers will remain available to
national and regional administrations who want to improve the project pipeline.
5. Reducing the number of verifications: Currently 100% of payment claims are
covered by administrative verifications, while on-the-spot verifications are sample
based. Possible changes include making management verifications risk-based,
instead of covering 100%. This more proportionate approach to audits would imply
an important reduction of the audit burden for “low risk” programmes, reducing total
administrative costs of the ERDF and CF by 2-3%93
.
6. A more proportionate approach to audits: As regards audits, reduction of the
administrative cost could come in particular from the application of a more
proportionate approach with lower audit requirements for programmes with low risk.
This could mean carrying out only a limited number of audits of operations would be
carried out. The selection of “low risk” programmes should be based on objective
criteria, such as good track record and/or low co-financing rates. In addition, the
number of audits covering territorial cooperation programmes could be drastically
reduced, by introducing a common audit sample for ETC programmes.
4.4. Financial instruments ("FIs"): simplification and streamlining
The use of financial instruments in ERDF and CF has increased significantly in recent
years. In 2007-2013 around EUR 12 billion of Structural Funds was invested in this way,
89
Art. 61 and 65(8) of the CPR.
90
Use of new provisions on simplification during the early implementation phase of ESIF (2017) complete reference
91
Spatial Foresight & t33, op.cit. preliminary results
92
Reference IAS study
93
Ibidem
67
while in 2014-2020 this is over EUR 21 billion, of which over 95% through the ERDF
and CF. SMEs account for just over half of planned investment – together with
innovation and the low carbon economy, they represent the bulk.
Financial instruments are acknowledged to be a successful and useful tool in the ERDF
and CF. The ex post evaluation noted their "potential to be a more efficient means of
funding investment"94
, based on (among other things) their revolving nature. A study of
the implementation of FIs found them to be financially sustainable and cost-effective95
.
In addition the ex post evaluation96
found that FIs:
 Assisted in the development of private financial markets in a number of regions.
 Played a crucial role in providing funding to SMEs during the credit crunch.
 Promoted investment in new technology and improving production processes.
However, FIs are not a goal in themselves. They are a means to an end – and there are
cases where grants are preferable or more effective. This means that there will not be
binding targets for their use, or an obligation to use them in certain areas.
Instead FIs will be promoted by removing obstacles to implementation. One third of
managing authorities find FIs too administratively complex and a further third lack
knowledge of these instruments97
. Although there is perception of improvement in 2014-
20, most managing authorities still want more administrative and legal certainty,
especially for audit.
To tackle these twin problems of complexity and lack of certainty, management and
control systems will be consolidated into one assurance system for both grants and
FIs. Checks and verifications will usually be at the fund level, not the individual
operation. This will simplify the overall audit system and increase legal certainty for FIs
for managing authorities. It will also reduce the burden for final beneficiaries.
Similarly, FI-specific reporting98
will be incorporated in the general reporting cycle.
Such alignment will reduce the widespread perception that FIs entail a lot of extra
reporting.
The ex-ante assessment will be streamlined and shortened:
 The market gap and needs assessment will be consolidated into the needs
assessment section of the programme. This enhances the role of the monitoring
committee in identifying needs – and whether a grant or FI is most appropriate to
meet them.
94
SWD, page 5
95
Implementation and take up study reference
96
SWD, pages 25-26
97
Reference to study. This is based on an online survey of all Managing Authorities of ERDF, CF, ESF and EMFF
programmes, plus 110 follow up interviews divided evenly between Managing Authorities and financial
intermediaries, including authors of ex ante assessments – results reported here are for ERDF and CF
managers.
98
Reference to article 46
68
 Elements with genuine added value (e.g. implementation arrangements, products,
final recipients targeted) will be addressed in a shortened ex ante assessment.
 Relevant elements of a previous ex ante assessment can be rolled over to the new
one.
Provisions on eligibility will be simplified and thresholds for management fees
rationalised. These have generated a lot of need for guidance, as well as some
confusion. In future: only minimum eligibility rules will to be set at EU level, leaving
more detailed provisions to the Member State.
Factors which disrupt the flow from one programming period to the next will be
smoothed out. Regulations which lead to questions after the end of the programming
period (eg use of funds, reflows…) will be simplified to only define minimum standards.
This will facilitate a smooth start to implementation and payments from day one of the
new period.
A Single Investment Fund at the European level
Currently there are multiple EU-level FI instruments, with the potential to cause
confusion among beneficiaries. These will be simplified and delivered through one single
investment fund - the Invest EU Fund. There will also be provisions to ensure better
complementarity between the InvestEU Fund and FIs under shared management.
Member States will have an option to channel a part their ERDF and CF resources via a
Budgetary Guarantee under the InvestEU Fund. To do so, the Member State would set
out their intention in the Partnership Agreement, explaining the goals of the transfer,
which of the thematic windows they wish to use (SMEs, innovation etc.) and geographic
earmarking. The InvestEU Fund impact assessment report includes further details.
4.5. Performance, flexibility and simplification: conclusions on the new system of
priorities and delivery
The new system of priorities and delivery of ERDF and CF promotes performance,
flexibility and simplification.
Performance, including in terms of:
 A stronger concentration on smart and green growth - the areas with greatest
impact and highest EU added value (see section 3.3).
 A clearer division of labour and more coherence with other relevant EU funding
streams, especially the other ESI funds and Horizon2020 (3.4).
 Scheduled reprogramming which explicitly refocuses on performance and on
emerging needs (4.1).
 Accelerating the programming process, returning to the "n+2" standard (4.1),
enabled by the various simplifications (e.g. 4.3 and 4.4).
69
 A greater focus on the preconditions of success, setting the enabling conditions
and making explicit links with economic governance (4.2).
 Opening the possibility of payments based on conditions (4.3).
 Removing the obstacles to, and promoting, Financial Instruments. These can be
more cost-effective than grants (4.4).
Flexibility in programming, including:
 More broadly drawn priorities which enable easy transfer of funding and
synergies between related themes now included in one priority (eg innovation and
SME support)(3.3).
 More flexibility in reprogramming, notably a "5+2" programming system where
the last 2 years are not programmed until closer to the time (4.1).
Simplification and reduction of the administrative burden on managers and beneficiaries:
 A simpler set of priority objectives (3.3)
 Simpler relationships between various EU funds, including the elimination of
several "double guichet"s (3.4).
 Simpler reprogramming (4.1)
 A simpler set of "enabling conditions" and simpler links to the European
Semester (4.2)
 A systematic series of simplifications to reimbursement, audit, management and
control (4.3).
 Simplification of management, audit and reporting of financial instruments,
aligning the system as far as possible with that for other forms of support (4.4).
5. HOW WILL PERFORMANCE BE MONITORED AND EVALUATED?
5.1. Monitoring
The ERDF and CF monitoring system has been developed and refined over successive
programme periods. In the current period, key elements include (Table 13):
 Financial data such as allocations, project selection and expenditure declared and
certified. Some of the data are disaggregated along several dimensions, including
intervention fields (e.g. rail), territorial dimension (e.g. urban), and finance (e.g.
grants).
 EU payments to the programmes, recorded in real time in the Commission's IT
system.
 Output indicators: 46 common output indicators and various programme specific
outputs. These are collected through monitoring systems – achieved values are
reported by Member States in annual implementation reports ("AIRs"). The
common indicators can be aggregated at EU level and are tracked publicly on the
ESI Funds Open Data Platform (see box).
70
 Policy results, akin to impact indicators (as defined in the Better Regulation
Guidelines), and measured by statistical data at regional or national levels.
Annual values are reported in the AIRs during the implementation period. The
main sources of data for these result indicators are national and regional statistical
systems, as well as by Eurostat.
Table 13 - Main monitoring data collected for ERDF and CF 2014-2020
Type of data Frequency Who collects Source
Various financial data Jan, June, July, October Managing authority Programme data
EU payments Continuous EU level Payments system
Output indicators Annual (in June) Managing authority Monitoring systems
Policy results Annual (in June) Managing authority Monitoring, national
statistics or Eurostat
Because of shared management, most output and result indicators are collected by
Member States. But there is a clear structure at EU level for (1) selection of indicators
and targets (2) quality checks and reporting.
The 2014-20 programmes had a clear process for selection of indicators and setting of
targets:
 Managing authorities proposed output and policy result indicators in the
programmes. For output indicators, the starting point was the 46 common output
indicators which were all used where appropriate99
. Programmes then added
programme specific output indicators, as well as policy result indicator – at least
one per investment priority, which captured the main goal of that priority. Output
and result indicators were examined as part of discussion with the Commission.
 Targets were set using unit costs derived from experience in the programme
itself, elsewhere in that Member State or elsewhere in the EU. The process of
setting targets was part of programme discussion with the Commission, and the
calculation methods were documented either in the programme itself, or (more
usually) in a working document accompanying the programme.
A study of the 2014-20 performance framework100
found that Member States made
significant efforts to establish the performance framework on a solid basis. Setting
milestones and indicators was mainly straightforward – only 20% of programmes had a
lot of difficulty in doing this.
Quality checks and structured electronic reporting are essential features, built into the
system:
 The monitoring systems for 2014-2020 benefit from reinforced scrutiny. The
programming rules require a declaration of assurance of the Managing Authority
99
For example, a programme only reports km of rail constructed if this is one of their investments.
100
Sweco, ÖIR, Spatial Foresight (2015) "Implementation of the performance frameworks in the 2014-2020 European
Structural and Investment (ESI) Funds"
http://ec.europa.eu/regional_policy/sources/policy/how/studies_integration/impl_pf_esif_report_en.pdf
71
on the reliability of data101
, while the audit strategy established by Member State
Audit authorities includes systems audits to ensure performance data reliability102
.
An audit trail on performance data is required103
, and reliability of performance
data is part of the audits on operations104
.
 Indicators are transmitted electronically to the Commission in a structured format
via an information system, SFC.105
This structured data has enabled swift
reporting on ESI Fund investments for a variety of audiences106
.
 A Monitoring Helpdesk has been established so that REGIO can digest the data
presented, internally analyse performance of the operational programmes and
identify possible outliers through the use of automated systems. Weaknesses or
apparent implausibility in the data are commented by the Commission and where
necessary corrections sought.
 In addition, the Open Data Platform tracks the achievement values as reported by
the Member States and is publicly available. This offers unprecedented
transparency and encourages “peer pressure” in reporting reliable data.
 This is an iterative, annual process. Managing authorities gain in experience and
accuracy – there has been a noticeable year on year improvement, with fewer
errors detected in the plausibility checks.
The open data platform
The European Structural and Investment Funds Open Data Platform presents data and
graphs for five funds, 28 countries, and more than 530 programmes, covering 42% of the
EU budget. The platform is regularly updated and is an important communication tool for
the general public, the media, analysts, and researchers. For more specialised audiences,
the platform offers open access to detailed data at programme level, including time-series
of planed and implemented resources and achievements, thus facilitating in-depth
analysis of the funds.
The platform meets several objectives: transparency and communication; promoting
excellence among Member States by providing a comparison tool; and enabling analysis
and research. In March 2017, the platform received the first EU Ombudsman Award for
Excellence in Open Administration.
101
Commission Implementing Regulation (EU) 2015/207, Annex VI - management declaration template.
102
Commission Implementing Regulation (EU) 2015/207 Point 3.2 of Annex VII.
103
Commission Delegated Regulation (EU) 480/2014, Article 25.1(i).
104
Commission Delegated Regulation (EU) 480/2014, Article 27.2 c).
105
SFC stands for System for Fund Management in the EU. SFC is the information system for the programming period
used by Managing Authorities of the programmes to report electronically to the Commission, enabling the
shared management between the Member States and the Commission.
106
A detailed presentation of the types of reports and their frequency for 14-20 is presented in Annex I.
72
The 2014-20 performance framework was highly appreciated by programme
stakeholders, who noted that it helped focus the programme from the outset, served as a
guide for implementation and defined realistic targets and expectations (see Figure 9).
Only 10% of respondents saw no benefit. Moreover, there is evidence that the
development of performance frameworks generated considerable and useful debate
within Member States and between Member States and the Commission107
.
Figure 9 - What do you see as the main benefit of the performance framework?
Source: Sweco, ÖIR, Spatial Foresight (2015) "Implementation of the performance frameworks in the
2014-2020 European Structural and Investment (ESI) Funds". Respondents were asked to select one
answer only.
107
Sweco, ÖIR, Spatial Foresight (2015) "Implementation of the performance frameworks in the 2014-2020 European
Structural and Investment (ESI) Funds"
http://ec.europa.eu/regional_policy/sources/policy/how/studies_integration/impl_pf_esif_report_en.pdf
0%
5%
10%
15%
20%
25%
30%
35%
40%
It will help to better
guide the programme
during implementation
It helped define realistic
targets&expectations
It helped focus the
programme
No benefit Other
Main benefits of performance framework
73
Monitoring post-2020
The post 2020 system will therefore build on the strengths of the 2014-20 system,
retaining the shared management system, quality checks, structured reporting and open
data platform. But experience shows the need for several improvements.
1. Introducing direct result indicators, in line with best practice elsewhere. The
2014-20 system of indicators for ERDF and CF includes currently only two levels:
outputs and "policy results" (which correspond to "impact indicators" in other systems).
The study on the performance framework noted the sharp dichotomy between outputs on
the one hand and impacts on the other. Post-2020, an intermediate layer of direct results
will be created, in line with the Commission's "Better Regulation Guidelines".
2. Extending the common indicator set – from outputs only to results and impacts.
Common output indicators based on agreed definitions have proven a success. Of all
instances of indicator use in the 2014-20 ERDF and CF programmes, the 46 common
output indicators account for 60% by number and 60-70% by financial allocation. These
common indicators can be aggregated across programmes and countries (in contrast to
programme specific indicators) and are therefore key tools in accountability,
transparency and communication.
Post-2020, there will be a menu of common indicators at all three levels: outputs, direct
results and policy result/impact indicators (see Table 11 earlier for initial proposals for
outputs and direct results). Programmes will still be able to propose programme specific
indicators, but will be encouraged to use common indicators where possible. There will
be stronger methodological support in terms of detailed definitions and methods of
calculation for outputs and results. Having common indicator sets will mean we can
communicate result and impact indicators at the EU level.
3. More electronic transmission of data, lighter annual reports, more debate on
results. The electronic exchange of information between Managing Authorities and
Commission via SFC has reduced administrative burden and increased the scope of data
transmitted. Conversely, the added value of annual reports is questionable. The
quantitative and the qualitative information included in them is outdated by at least half a
year when they are submitted and by 9 months or more by the time the review process is
finished and the data published.
Post-2020, there will therefore be:
 More frequent transmission of all quantitative data (notably outputs and results)
by electronic means six times a year (instead of once via the annual report). It will
be published rapidly via the open data platform, rather than 9-12 months later.
 A revamped annual review meeting between the Commission and the Member
State. Instead of discussion on the basis of a document representing the state of
play from 9 (or more) months previous, the meeting will be focus on policy
dialogue on current issues. The qualitative side of the annual report will be
replaced by a short public record of the outcome of the meeting.
74
5.2. Evaluation
The 2014-2020 period saw the introduction of a regulatory requirement for impact
evaluations by programmes108
. This has borne fruit and we expect nearly 1000 evidence-
based impact evaluations to be completed by 2024 (Table 14).
To build on this post-2020, there will be measures for:
1. Improved evaluation design. To align with evaluations carried out by the European
Commission, there will be a regulatory requirement for Member States to address in their
evaluations the five main evaluation criteria (EU added value, effectiveness, efficiency,
coherence and relevance) from the EC Better Regulations Guidelines. This would put
impact evaluations on a more coherent basis and feed into evaluation and reporting
carried out at the Commission level.
Member States will continue to be required to carry out evaluation plans and submit them
to the Commission. This will enable the Commission to assess the quality of the plans –
and ask Member States to correct potential gaps in their evaluation strategy.
DG REGIO will continue to promote a full toolbox of methods, depending on the topic.
The 2007-13 ex-post evaluations include counterfactual analysis, theory–based impact
evaluation, network analysis, case studies, as well as modelling (with QUEST and
RHOMOLO).109
2. Better data availability. The systematic collection of indicator data outlined above
will provide a better basis for evaluation. In addition, there will be:
 Clearer reflection in Member State evaluation plans on data needs. Notably in the
case of counterfactual analyses, which requires data on non-beneficiaries as well
as beneficiaries.
 Systematic collection of data at operation level. One of the major challenges of
evaluations for Cohesion Policy has traditionally been data at the operation level
– Commission evaluations usually start by collecting such data. The new
provisions will require managing authorities to collect and publish basic operation
data on a consistent basis, notably start and end date, Fund, specific objective,
total financing, public and private, EU contribution, and intervention field(s).
 Supporting Member States in the use of "big data solutions", including the cross-
linking of various forms of administrative and firm-level data. It may be
advantageous to involve in the evaluations the bodies responsible for this data.
3. Continued support to Member States to enhance their evaluation capacity. In the
2014-20 period, DG REGIO established an Evaluation Helpdesk which provides a
108
Previously, there was an obligation for evaluation during the period, but a large majority focussed on process and
delivery, not impacts.
109
http://ec.europa.eu/regional_policy/en/policy/evaluations/ec/2007-2013/
75
number of support services as follows: feedback on evaluations plans received from
Member States, organization of annual summer schools on evaluation issues, syntheses
of the results of evaluation from Member States, peer review analyses of selected
evaluations upon demand from Member States, methodological support tailored to the
needs expressed by Managing Authorities, as well as an online library of evaluation
studies from Member States, with extended abstracts in English for selected studies.
Additional support activities include exchange of information on evaluation results,
consultations, and promotion of good practices, as well as REGIO-led Evaluation
Network meetings, organised 2-3 times a year.
4. Collection and synthesis of interim evaluations. The above requirements will lead to
a higher proportion and higher quality of impact evaluations. These evaluations will be
collected, summarised and the lessons drawn together. In the light of gaps and
outstanding questions, the Commission may also launch complementary ad hoc
evaluations on specific topics. This will enable interim evaluation findings by 2024/5 to
feed into the last two years of programming, as well as preparations for the next MFF.
5. Ex-post evaluations. The Commission will conduct a systematic ex post evaluation
for the end of the period. Member States will also be required to conduct retrospective
evaluations to assess the impact of their programmes. Moreover, the ex post evaluation
of 2014-2020 will be launched in 2022 and the related findings will be available in
2024/5, in time for the revision of the last two years of programming and for the
preparation of the next MFF. The design of the ex-post evaluation will take into account
primarily the results available from the evaluations carried out by the Member States and
the findings of a gap analysis of the areas of investments not sufficiently covered by
these evaluations.
Table 14 - Evaluations planned by Member States 2014-2020
ERDF+CF multi-Fund Total
No. % No. % No. %
Impact-oriented 294 38 344 47 638 43
Impact and procedure/implementation and/or
monitoring/progress-oriented 184 24 150 20 334 22
Procedure/implementation-oriented 120 16 107 14 227 15
Monitoring/progress-oriented 91 12 84 11 175 12
Procedure/implementation and
monitoring/progress-oriented 30 4 36 5 66 4
Other 46 6 19 3 65 4
Total 765 100 740 100 1,505 100
SWD(2017)452 Strategic report on the implementation of the ESI Funds
https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=SWD:2017:452:FIN
76
Annex 1: Procedural information
1. LEAD DG(S), DeCIDE PLANNING/CWP REFERENCES
DG for Regional and Urban Policy (DG REGIO)
2. ORGANISATION AND TIMING
This impact assessment accompanies the legislative proposals for the ERDF and the
Cohesion Fund, prepared in the context of the post-2020 MFF. It has been drafted by the
staff of DG REGIO.
The work on the Impact Assessment was supervised by the Inter-Service Steering Group
(ISSG), which met twice in February and March 2018. 21 DGs participated in the ISSG
meetings110
.
An internet-based public consultation took place took place between the 10th January
and 9th March 2018. The results are presented in annex 2.
3. CONSULTATION OF THE REGULATORY SCRUTINY BOARD (RSB)
 An informal upstream meeting was held on 31 January with RSB representatives and
the participation of SG, DG BUDG and JRC. During this discussion Board members
and representatives of the horizontal Services provided early feedback and advice on
the basis of the inception impact assessment. Board members' feedback did not
prejudge in any way the subsequent formal deliberations of the RSB.
 A formal hearing with the RSB was held on 18 April 2018 and a negative opinion
delivered on 20 April.
 These comments were taken on board (see table below) and the document
resubmitted to the RSB on 3 May. A positive opinion with reservations was delivered
on 7 May. These comments were taken on board as in the table below.
110
AGRI, BUDG, CLIMA, CNECT, COMP, ECFIN, ECHO, EMPL, ENER, ENV, GROW, HOME, JRC,
JUST, MARE, MOVE, REGIO, RTD, SG, SJ, SRSS.
77
RSB opinion How addressed
Round 1: Negative opinion
(1)The report does not consider
implications of reducing ERDF and CF
funding capacities.
(2)The report does not explain how
changed objectives and allocation criteria
would redirect the programme.
(3)It does not consider possible (sub-)
options for geographic coverage, regional
eligibility and means for financial
allocations under the ERDF/CF.
(4)The report does not sufficiently explore
implications of changes to the delivery
mechanisms.
(1) A 10% cut in funding is now modelled
in section 3.2, using three different options.
(2) The text and graphs of section 3.2 show
how the programme would be redirected
under the various options.
(3) Three options for geographic and
thematic allocations are outlined in section
3.2, with indications of the main line of
redirection.
(4) The chapter on delivery mechanisms
has been developed along the lines
requested by the RSB (see section on
comment 8 below).
Round 2: positive opinion, with the
following reservations:
(1) The content and the implications of the
preferred option (thematic concentration)
are not sufficiently clear. The revised
report does not provide sufficient evidence
that thematic concentration will contribute
to reducing regional and national
disparities.
(2) The report does not spell out future
modalities for the implementation of the
'Berlin method' for financial allocation and
reasons for not considering alternative
options.
(3) The report does not describe the scope
and the potential impacts of a European
cross-border mechanism.
(4) The report does not clarify the
consistency/complementarity between the
ERDF/CF and the new Reform Support
Programme.
(1) The content of all options is now
spelled out on pages 28-29 and compared
in tabular form in table 7. Figure 5
considers the thematic impact of the
preferred option by Member State. The
impacts of the various options on regional
and national growth rates are examined and
compared by the QUEST macroeconomic
model in the text on pages 30-31 as well as
in the numbers in table 9 and figures 6 and
7.
(2) The key features of the Berlin method
are now outlined in a box on page 29,
along with the reasons for retaining this
method and not considering alternative
options.
(3) The cross-border mechanism is
described on pages 41-42. A report on
potential impacts is quoted and the source
footnoted.
(4) The relationship with the Reform
Support Programme is now explained on
page 60.
78
4. EVIDENCE, SOURCES AND QUALITY
Evaluations carried for the Commission (DG REGIO)
Ex Post Evaluation of the ERDF and Cohesion Fund 2007-2013 – including the Commission’s summary
and 14 thematic work packages prepared by external evaluators for DG REGIO:
http://ec.europa.eu/regional_policy/en/policy/evaluations/ec/2007-2013/
Cohesion Report
The 7th Report on Economic, Social and Territorial Cohesion, published by the Commission in October
2017, analysed the state of the EU's economic, social and territorial cohesion and set the scene for cohesion
policy after 2020.
http://ec.europa.eu/regional_policy/sources/docoffic/official/reports/cohesion7/7cr.pdf
Studies carried out for DG REGIO in preparation for post-2020 EU funds:
Study “The use of new provisions during the programming phase of the European Structural and
Investment Funds”
http://ec.europa.eu/regional_policy/en/information/publications/studies/2016/the-use-of-new-
provisions-during-the-programming-phase-of-the-european-structural-and-investment-funds
Study “The implementation of the provisions in relation to the ex ante conditionalities during the
programming phase of the European Structural and Investment (ESI) Funds”
http://ec.europa.eu/regional_policy/en/information/publications/studies/2016/the-implementation-of-
the-provisions-in-relation-to-the-ex-ante-conditionalities-during-the-programming-phase-of-the-
european-structural-and-investment-esi-funds
Study "Implementation of the performance frameworks in the 2014-2020 European Structural and
Investment (ESI) Funds"
http://ec.europa.eu/regional_policy/sources/policy/how/studies_integration/impl_pf_esif_report_en.pdf
Study “Implementation of the partnership principle and multi-level governance during the 2014-2020 ESI
Funds”
http://ec.europa.eu/regional_policy/en/information/publications/studies/2016/implementation-of-the-
partnership-principle-and-multi-level-governance-during-the-2014-2020-esi-funds
Study “Setting up a database to assess impacts and effects of certain thresholds and limits in Regulation
(EU) No 1303/2013 (CPR)”
http://ec.europa.eu/regional_policy/en/information/publications/studies/2016/setting-up-a-database-to-
assess-impacts-and-effects-of-certain-thresholds-and-limits-in-regulation-no-1303-2013-cpr
Study “Use of new provisions on simplification during the early implementation phase of ESIF”
http://ec.europa.eu/regional_policy/en/information/publications/studies/2017/use-of-new-provisions-on-
simplification-during-the-early-implementation-phase-of-esif
Study “Improving the take-up and effectiveness of financial instruments”
http://ec.europa.eu/regional_policy/en/information/publications/studies/2017/improving-the-take-up-and-
effectiveness-of-financial-instruments
Studies for DG REGIO to be published in 2018
Study on the coordination and harmonisation of ESI Funds and other EU instruments
Feasibility study for a potential use of Budget Support to deliver ESI Funds
Study “Effective and efficient delivery of ESI Funds - Exploring alternative delivery mechanisms”
Study “New assessment of administrative costs and burdens in ESI Funds”
Other relevant documents
Report “Competitiveness in low-income and low-growth regions”
79
http://ec.europa.eu/regional_policy/sources/docgener/studies/pdf/lagging_regions%20report_en.pdf
Communication “Strengthening Innovation in Europe's Regions: Strategies for resilient, inclusive and
sustainable growth
http://ec.europa.eu/regional_policy/sources/docoffic/2014/com_2017_376_2_en.pdf
Communication “A stronger and renewed strategic partnership with the EU's outermost regions”
http://ec.europa.eu/regional_policy/en/information/publications/communications/2017/un-partenariat-
privilegie-renouvele-et-renforce-avec-les-regions-ultraperipheriques
Communication “Boosting growth and cohesion in EU border regions”
http://ec.europa.eu/regional_policy/en/information/publications/communications/2017/boosting-
growth-and-cohesion-in-eu-border-regions
Summary of the LSE – DG REGIO academic conference “Reassessing economic development policies for
regions and cities”
http://ec.europa.eu/regional_policy/en/information/publications/brochures/2016/reassessing-economic-
development-policies-for-regions-and-cities-growth-and-equity-institutions-and-governance-people-
and-places
Report from the OECD- DG REGIO seminars “Rethinking Regional Development Policy Making”
http://www.oecd.org/governance/rethinking-regional-development-policy-making-9789264293014-
en.htm
80
Annex 2: Stakeholder consultation – synopsis report
The stakeholder consultation on post-2020 regional policy proposals included several
elements:
- Cohesion Forum, held in June 2017 - a large scale high-level political event (700+
participants) to discuss cohesion policy responses to the main EU economic and social
challenges;
- Cohesion Report (7th report on economic, social and territorial cohesion), October
2017 which analysed the state of the EU's economic, social and territorial cohesion
and set the scene for cohesion policy after 2020. The adoption of the report was
followed by numerous presentations and discussions with various stakeholders.
- Debates and exchanges on post-2020 with the Council, Parliament and the Committee
of Regions. Meetings of the Structured Dialogue with ESIF partners at EU level.
- Conferences and workshops with the academics (with the European Regional Studies
Association – ERSA and the Regional Studies Association – RSA) and international
organisations (OECD).
The main element of the consultation process was online public consultation on cohesion
policy, which took place between the 10th
January and 9th
March 2018. The questionnaire
used the EU survey site: https://ec.europa.eu/info/consultations/public-consultation-eu-
funds-area-cohesion_en. Intensive communication was carried out in order to encourage
a high level of participation across the EU.
The scope of the public consultation was broader than the scope of the impact assessment
and covered not only the ERDF and the Cohesion Fund, but also the ESF (European
Social Fund), the FEAD (European Aid to the Most Deprived), the EGF (European
Globalisation Fund) and the EaSI (European Programme for Employment and Social
Innovation).
The questions covered both the assessment of the performance of the current policy as
well as the views on key aspects of future policy design. The questionnaire included 5
sets of closed questions (multiple choice) and 4 open questions. There was also a
possibility to upload concise documents, such as position papers.
Altogether 4395 replies were received in the public consultation and 676 documents
(mainly position papers) were uploaded. The analysis was made in line with Better
Regulation Guidelines and Toolbox (Tool 54), with a support of external consultants111
.
The methodology included, first, elimination of duplicates and identification of the
responses being part of a campaign, which were separated from the rest with only one set
of replies being included in the main analysis. After in this way, the number of
questionnaires was reduced from 4334 to 3958. The analysis of replies combined the
reading of the text with computer-assisted text analysis.
111
Applica and Ismeri Europe.
81
Out of 3958 questionnaires analysed, 47% of replies were submitted by individuals and
53% by organisations including regional or local authorities (18%), NGOs (8%), national
authorities (4%), enterprises, business associations, consultancies and academia (3%
each), churches and religious communities (2%). Responses to the consultation were
submitted from all Member States. The largest number of responses came from Italy
(21%), followed by Poland (14%), France, Germany and Spain. Some 74% of
respondents reported having experience with the ERDF and/or the Cohesion Fund, while
57% with ESF; 10% of respondents did not indicate experience of any of the funds.
Replies to multiple-choice questions
Closed questions concerned:
1) the importance of main policy challenges;
2) the extent to which current programmes address these challenges;
3) added value of EU funds;
4) main obstacles preventing current programmes from achieving objectives;
5) actions needed to further simplify the delivery of funds.
1) Question on the importance of selected challenges to Cohesion Policy.
Among 14 challenges pre-identified and included in the questionnaire, the results
indicate that the respondents consider reduction of regional disparities as the most
important challenge (94% of respondents considered it as very or rather important),
followed by reducing unemployment (92%). Promoting social inclusion, promoting
economic growth in the EU, fostering research and innovation and transition to low
carbon economy were also among the most important challenges. The smallest
proportion saw addressing the adverse side-effects of globalisation (72%) and promoting
sound economic governance and reforms (68%) as important.
Figure 1: Share of replies to the question about the importance of policy challenges
82
Respondents with experience of the ERDF/CF and those with experience of the ESF had
much the same view of the relative importance of the different challenges. There was
also little difference between countries in the relative importance attached to the different
challenges, despite differences in national circumstances, which might suggest a
tendency for respondents to take an EU-wide perspective on the challenges. On the other
hand, organisations tend to assign higher importance to challenges in the area of their
specific interest; for example regional and local authorities - to territorial cohesion and
reducing regional disparities.
Apart from the challenges listed in the questionnaire, other challenges mentioned by the
respondents included security, the cultural heritage, demographic change, combating
corruption and migration (less than 1% of responses each).
2) Question on the extent to which current programmes address already these challenges.
The challenges which, according to respondents, are addressed most successfully are:
research and innovation (61% of respondents considered them as successfully addressed
to a large or fairly large extent), territorial cooperation (59%) and education and long-
term learning (56%).
On the other hand, there are some other challenges which are only to some extent or not
at all addresses by funds, such as globalisation, sound economic governance and
reforms, quality of institutions and promotion of common values. The challenges
considered the least successful in addressing challenges were the also perceived as the
least important for Cohesion Policy in the previous question. This may reflect the
perception of the respondents that that funds covered by the public consultation (apart
from the EGF) are not directly targeted at these challenges.
Figure 2: Share of replies to the question to what extent the current
programmes/funds successfully address these challenges
Respondents with experience of a given fund tended to have a more likely to have
favourable view of its success. In general, respondents with experience in the ERDF/CF
83
tended to view the Funds as being more successful in addressing most of the challenges
than ESF ones. There are also some differences between countries and categories of
respondents in the perception of success of policy in addressing various challenges.
Those from Italy, Slovakia, Hungary and Bulgaria regarded policy as being less
successful than the respondents from the other countries, while those from Luxembourg,
Romania, Malta, Finland and Denmark considered it more successful. Among different
categories of respondents, regional and national authorities had the most favourable view
of the policy’s success.
3) Question to what extent Cohesion Policy programmes add value to what Member
States could achieve at national, regional and/or local levels without such funds.
Three quarters of the respondents consider that the current Cohesion Policy programmes
effectively add value to a large or a fairly large extent to what Member States could
achieve. Some 20% replied that they add value to some extent only, and 2% - that not at
all.
Figure 3: Share of replies to the question to what extent the current
programmes/funds add value compared to what Member States could
achieve without EU funds?
Public authorities at all level had a more favourable of the added-value of the Funds than
the other respondents. Respondents from Denmark, Lithuania, Luxembourg, the UK,
Greece, Poland and Slovenia had the most positive opinion of the added-value of the
Funds (over 85% responded that they added value to a large or fairly large extent), while
Austria, Croatia, Romania and Italy had the least positive opinion.
4) Question about the obstacles preventing Cohesion Policy funds / programmes from
successfully achieving their objectives.
Complex procedures were considered as a by far the most important obstacle: 86% of
respondents consider it as an obstacle to a large or to a fairly large extent. Heavy audit
and control procedures were regarded as the second most important obstacle (68%
0 10 20 30 40 50
Not at all
Don't know
To some extent
only
To a fairly large
extent
To a large extent
Total ERDF+CF EMPL
84
indicating this), followed by lack of flexibility to react to unforeseen circumstances
(60%). Insufficient ownership of projects was considered the least important obstacle,
followed by co-financing rates and insufficient information about funding and project
selection. The opinions of ERDF and EMPL respondents do not differ much in this
respect.
Other obstacles in addition to those listed in the questionnaire, indicated in the replies,
included corruption, lack of transparency in managing the Funds, lack of strategy and
priority setting in their allocation and insufficient integration with other EU funds.
85
Figure 4: Share of replies to the question on the obstacles preventing funds from
achieving objectives
5) Question about the actions which would best help further simplify and reduce
administrative burdens for beneficiaries.
The most frequent choice was fewer, clearer, shorter rules, with 92% of the respondents
indicating that this would help to simplify and reduce administrative burdens to a large or
a fairly large extent. It was followed by alignment of rules between EU funds and more
flexibility once funding is available. The least frequent choice was More freedom for
national authorities to set rules’, as more than half of respondents considered that it
would not help simplify and reduce burden at all, or only to some extent.
Figure 5: Share of replies to the question about the steps to further simplify and
reduce administrative burden
86
Replies to open questions
Four open questions were included in the consultation questionnaire:
1) the added value of cohesion policy in comparison to national policies;
2) principal objectives of Cohesion Policy;
3) synergies between programmes or funds;
4) a general question for respondents to add any further points they wished.
There were 2170 usable and relevant replies to the first question, 1647 to the second,
1441 to the third and 602 to the open question.
Question 1: Added-value of cohesion policy
The points made in reply to this question can be grouped under a number of themes
summarised below, ordered below in terms of the number of replies focusing on them:
Territorial cooperation. Transnational and cross-border cooperation initiatives are a clear
example of the added-value of the Cohesion Policy, facilitating the transfer of knowledge
and exchange of good practice as well as investment which has strong cross-border spill-
over effects. They also help lagging regions to tap into measures applied in more
developed ones and enable joint initiatives to be undertaken to tackle common challenges
(energy security, climate change adaptation and mitigation, water management and
safeguarding biodiversity.
A more social and inclusive society. The contribution to social integration and a more
inclusive Europe is an important aspect of cohesion policy added-value. Cohesion policy,
together with the additional resources it provides, have made it possible to carry out
social initiatives across the EU, so helping to combat poverty and to support the
disadvantaged. It has also helped to spread common values, such as equality and non-
discrimination.
Policy innovation. An essential feature of EU added-value is related to the support given
to policy experimentation and innovation.
Adoption of higher standards. An important element of the added-value of Cohesion
policy lies in the set of common objectives and rules that requires high institutional
standards (transparency, evidence-based policies) and which leads to the investment
financed being more efficient and effective than for national or regional policies. It has
also strengthened institutional capacity.
Financial support. Added-value is seen in the financial support that cohesion policy
gives to regional and national policies and the fact that the funding for national policies
would have been much smaller in many cases without the support provided.
Economic and territorial cohesion. Added-value stems from Cohesion policy reducing
regional disparities and facilitating convergence. It is also seen in the contribution that
the EU funding made to mitigate the negative effects of the global economic and
financial crisis, which would have been significantly more serious without EU support.
87
Networking and exchanges within countries. Added-value arises not only from ETC
programmes but also from the opportunities for cooperation and partnership between
MAs within countries.
Question 2: Necessary changes in objectives of Cohesion Policy funds/programmes
The replies to this question focused mainly on changing the priority given to particular
objectives rather than on suggesting how existing ones might be extended or modified.
Environment, energy, sustainable urban development. Cohesion policy in future should
put more emphasis on objectives such as climate change mitigation and adaptation,
energy transition, biodiversity, sustainable use of natural resources and environmental
protection and remediation.
Transregional cooperation. Since cross-border cooperation programmes have significant
added-value, they should have greater strategic and financial importance in the next
programming period. However, such programmes should not focus on specific themes
(such as innovation) but need to be more flexible so as to be able to respond to emerging
transregional challenges (e.g. common public services, clean transport, energy transition
and climate change).
Territorial competitiveness: SMEs and tourism. Tourism is one of the main levers for
achieving economic growth, employment and social development at local level. In
consequence, more emphasis should be put on supporting tourism in the future
programming period, along with innovation in SMEs.
Administrative simplification. Many responses under this theme focused on the need to
overcome the administrative and management issues that limit the effectiveness and
efficiency of cohesion policy funds rather than on providing suggestions relating to
objectives. They called for simplification in this regard so that efforts can be focused on
the real objectives of policy.
Education and employment. According to respondents, ESF support should be multi-
stage and comprehensive and be able to extend beyond the timeframe of a single
programming period. A number of ESF initiative (such as the Youth Guarantee), should
be reviewed to make them less restrictive and open to more broadly-defined target
groups (such as in terms of age).
Combating poverty and promoting social inclusion. ESF and FEAD support for creating
a more inclusive society in the next programming period should be increased.
Question 3: Strengthening synergies between programmes/funds.
Most of the replies under this theme suggested merging funds, harmonising their
regulations or ensuring more coordination between programmes in terms of their
objectives and implementation.
The need for simplification was again stressed either as a potential outcome of merging
funds or as a major objective in itself which was more important than increasing
synergies or reducing overlaps, which many regarded as not being important. A number
88
of respondents called for funds to be merged so long as it led to simplification and a
reduction in administrative burdens.
Question 4: Further points raised by the respondents
Need for streamlining and simplifying administrative requirements. Cohesion Policy
procedures involve excessive complexity and bureaucracy, which limits the effectiveness
of programmes. The regulations need to be simplified and made more flexible. Excessive
auditing and too many controls are a particular problem in respect of a small projects or
small OPs. The focus should be more on results and less on administrative aspects.
Doing more to address local, social and territorial challenges. Cohesion policy is
important in building more democratic, prosperous, inclusive and resilient societies
throughout the EU and not only in the less developed regions. Cohesion policy should
maintain its current strategic focus and framework and continue to be the main public
investment policy in the next programming period. The current configuration of Funds,
geographical coverage and the core principles should be maintained, but the share of
cohesion policy in the future EU Budget needs to be increased or at least kept unchanged.
Information, and publicity, on the projects supported should improve to ensure more
transparency and make people more aware of the EU added-value which is generated.
The place-based dimension of development policies should be strengthened and there
should be greater flexibility in priority setting and resource allocation in order to promote
‘smart strategies’ targeted at tackling different territorial needs.
Smart and sustainable urban development. The urban dimension is of major importance
in local and regional development. After 2020, cohesion policy should pay greater
attention to urban planning and aspects which can increase the attractiveness of cities as
well as their economic potential. However, cities and metropolitan areas cannot prosper
at the expense of surrounding rural areas, so particular attention should be given to
infrastructure connecting urban and rural areas if balanced development is to be achieved
and depopulation avoided.
Position papers
Overall 676 documents were uploaded by 582 different respondents –around 15% of all
those who participated in the consultation. Over half of all papers were uploaded by
respondents from four countries: Germany, Belgium, France and Italy. The vast majority
- nearly 90% - of the papers were uploaded by organisations or individuals responding in
a professional capacity, mainly by regional or local authorities and NGOs.
In general the papers had a clear link with the main issues covered by the consultation
and which were developed in some detail in the reflection papers published by the
Commission, particularly the reflection paper on the Future of EU Finance. In many
cases, they reiterated the points made in the replies to the open questions summarised
above. The main points to come out of the positions papers are outlined below.
The most frequently quoted objective of cohesion policy should continue in the post-
2020 period to be to reduce disparities between regions and to promote economic, social
and territorial cohesion across the EU.
89
In terms of eligibility, while some respondents emphasised that all EU regions should be
supported, the consensus was that the focus should continue to be on the less developed
ones.
There were a number of proposals to broaden the set of indicators used beyond GDP (or
GNP) per head to determine the allocation of funding. These indicators should cover
employment, education, demography and the environment, though a note of caution was
expressed that any extension should not reduce the concentration of support on the less
developed regions.
Bottom-up approaches, shared management structures and multi-level governance were
considered by virtually all respondents as more suitable for addressing local needs than
centralised structures. Some expressed the need for a more meaningful application of the
partnership principle.
Result-orientation should continue to be the Leitmotif of cohesion policy in the post-
2020 period according to all respondents who expressed a view on this issue. An efficient
monitoring system, appropriate indicators and independent evaluations are recognised as
essential pillars of a result-oriented policy.
Most respondents agree that thematic concentration is helping to achieve larger impacts
and more significant results. It should continue to be a principle in the next period. Some
consider in addition that ex ante conditionality has helped to avoid dispersion of funding
and to ensure stronger links between cohesion policy objectives and national strategies
and structural reforms.
A number of investment priorities were advocated, in particular i) research, innovation
and SMEs support; ii) digital infrastructure and ITC; iii) urban development based on
digitalisation (i.e. smart city development); iv) environment and energy efficiency; v)
combating poverty and social exclusion.
Cooperation between regions should be strongly supported not only in the form of cross-
border cooperation but also across regions all over Europe. This is essential for making
smart specialisation happen. Innovation in high tech sectors often depends on knowledge
exchanges and spill-overs from cooperation between clusters or knowledge hubs across
Europe.
Very different positions were expressed in respect of the organisation and the
management of the funds in the future. Proposals range from harmonising rules and
regulations to creating a unique fund merging all the current ones together. The objective
is better coordination and integration of the instruments.
Better coordination and streamlining is not only needed between the different ESI funds
but also with the other EU funding instruments. Regulations should be harmonised and
horizontal rules, such as state aid rules, should be the same everywhere.
There is a strong call for simplification of procedures and rules, less control and more
trust. Controls and audits are perceived as excessive and working against the effective
application of the subsidiarity, proportionality and partnership principles. Excessive
control causes delay in programme implementation. Proposals for improvement range
from the ‘single audit principle’ to ‘performance-based approaches’.
90
Simplification of regulations and procedures was called for by national and local
authorities in particular. Regulations should define the essential structural elements but
Member States should be given flexibility to adapt the framework to their specific
national and regional needs. The simplified cost option is seen as an effective tool for
simplifying and accelerating payment procedures.
Many of the respondents urge better communication in respect of EU policy objectives
and outcomes and the role of Europe in people’s daily lives.
91
Annex 3: Relevant Evaluations
The ex post evaluation of the ERDF and Cohesion Fund 2007-13 was completed in 2016.
The results include the Commission’s summary112
, a synthesis report113
and 14 thematic
work packages. They are available on website:
http://ec.europa.eu/regional_policy/en/policy/evaluations/ec/2007-2013/
The Commission’s summary was discussed with the Regulatory Scrutiny Board in June
2016 and revised following its opinion114
.
To ensure independence, the ex post evaluation was tendered to independent evaluation
companies or consortia, split into 14 lots (with 63 programme and 20 project case
studies) to enable each to be given to a specialist in the field. Over 3000 beneficiaries and
1000 Managing authority employees were interviewed, 530 stakeholders participated in
10 seminars to discuss the results. For each thematic contract, scientific experts external
to the companies commented on each main deliverable.
Here is the summary of the evaluation.
Ex post evaluation of the ERDF and Cohesion Fund 2007-13: summary115
Cohesion Policy is the key investment policy at the European level, delivering EUR
346.5 billion of European money in the 2007-2013 programming period. This evaluation
examines the impact of two of the three funds which make up Cohesion Policy – the
European Regional Development Fund and Cohesion Fund (total EUR 269.9 billion).
The ERDF and Cohesion Fund supported a wide range of projects – from enterprise
support to infrastructure, from urban regeneration to culture and social infrastructure. For
almost all the Cohesion Countries, the sum of these two funds was equivalent to between
20% and 60% of government capital investment – a crucial contribution in a period
including the economic and financial crisis.
The goals of Cohesion Policy are the reduction of disparities in regional development
and the promotion of economic, social and territorial cohesion. The evaluation examined
outcomes in terms of overall development (e.g. in terms of GDP/head) as well as at the
level of the various individual policy themes which are major constituents of economic,
social and territorial cohesion.
Impact on regional income and GDP/head
For the aggregate level, the ex post evaluation estimated that 1 euro of Cohesion Policy
investment in the period 2007-13 will generate 2.74 euros of additional GDP by 2023. In
other words, Cohesion Policy will be responsible for nearly EUR 1 trillion of additional
GDP (at EUR 950 billion, equivalent to almost the entire EUR 975.8 billion of EU
112
SWD(2016) 318
113
http://ec.europa.eu/regional_policy/sources/docgener/evaluation/pdf/expost2013/wp1_synth_report_en.pdf
114
RSB opinion: https://ec.europa.eu/info/sites/info/files/rsb_opinion_on_regio_swd22_july_2016.pdf
115
SWD(2016) 318, section 1: Executive Summary
92
budget for 2007-13 – a strong return on investment).
Every region and country in the European Union benefits from Cohesion Policy, even the
net payers. The positive effect takes account of the financing of Cohesion Policy via the
EU budget and is the sum of direct effects (via the investment) and indirect effects (via
increased trade) minus the contribution. The impact averages 4.2% of GDP in cohesion
countries and is small but always positive in non-cohesion countries, averaging 0.4% of
GDP by 2023.
In previous programming periods (notably 1994-99 and 2000-2006), Cohesion Policy
contributed to a steady process of convergence (a reduction in regional disparities in
GDP/head) in the EU, in a context where other developed countries generally
experienced no convergence (or even divergence). The financial crisis of 2007-2008
came at the beginning of the programming period examined in this document, and
created a poor climate for investment and convergence. The result is that regional
convergence over the period was very small, with the strong suggestion from
econometric work that there would have been divergence without Cohesion Policy.
Regional GDP/head is just one indicator of impact. A more detailed and complete picture
can be seen by examining the contribution to various individual policy themes across the
fields of economic, social and territorial cohesion.
Impact across various fields of economic, social and territorial cohesion
Estimates based on available monitoring data indicate that 400 000 SMEs were
financially supported. Although this is only 2% of firms in the EU, support focussed on
strategic enterprises – in the manufacturing sector, an estimated 15% of small firms and
over a third of medium sized firms received direct financial support. Monitoring data also
indicates that this support led directly to the creation of 1 million jobs – to put this into
perspective, a net total of 3 million jobs were created in the EU economy over the 2007-
13 period.
A major result of support was helping SMEs withstand the effects of the crisis by
providing credit when other sources of finance had dried up. Moreover, some of the
programmes used ERDF support as a test-bed for experimental and innovative policy -
research and innovation in Denmark, Sweden and Finland, the ‘Living Labs’ experiment
in Puglia (Italy) or the Inno-voucher scheme in Lithuania.
3700 large enterprises were also supported, bringing new technology and improved
productivity to the region as well as generating spillovers to SMEs, the human capital
base and social infrastructure.
Transport bottlenecks have been removed, travel times reduced and urban trams and
metros supported. Vital to economic development and often contributing to
environmental quality, this includes the construction of 4900 km of roads, mostly
motorways (of which 2400 km on the TEN-T). It also includes the construction or
upgrading to necessary standards of 2600 km of TEN-T railway.
Cohesion Policy has also made a significant contribution to the environment: a
substantial number of landfill sites which did not comply with EU standards were closed
down while in the Czech Republic, Hungary, Lithuania, Poland and Slovenia, as well as
93
Croatia, the proportion of waste which was recycled was increased by over 10 percentage
points. Moreover, in Lithuania, energy efficiency measures in 864 public buildings
reduced consumption 236 GWh a year by end 2014, which implies a cut of almost 3% in
overall annual energy consumption in the country.
Investment in social infrastructure led to the modernisation of schools and colleges in
Portugal, benefiting over 300 000 children and young people as well as the upgrading of
schools and healthcare facilities in Poland for 1.9 million people.
Lessons for the future
The evaluation found many lessons specific to individual policy themes. However two
particular cross-cutting lessons for the future emerged:
- The monitoring of Cohesion Policy improved from the previous 2000-2006 period, and
there was a strong focus on investing the money, delivering projects and generating
outputs. However very few 2007-13 programmes had a "focus on results", setting clear
goals for changes at the level of the region, selecting projects accordingly and tracking
progress towards those goals. This was addressed in the 2014-20 regulations through the
result orientation, but systematic delivery through the period will require a cultural shift
in many cases.
- An important feature of the 2007-13 period was the increased use of financial
instruments3 (EUR 11.5 billion, up from 1 billion in the previous period). These have the
potential to be a more efficient means of funding investment across many policy areas,
but the legal provisions were not detailed enough in 2007-2013. This, together with the
inexperience of many implementing bodies, led to delays in implementation. A further
challenge is spreading financial instruments beyond enterprise support, where over 90%
of 2007-13 financial instrument funding was concentrated.
94
Annex 4: the macro-economic models
Quest
QUEST has been developed by DG Economic and Financial Affairs (DG ECFIN) of the
European Commission. The model is regularly used for the analysis of key fiscal and
monetary policy scenarios, for assessing the impact of the structural reforms, or else for
contributing to the economic projections of DG ECFIN. For the analysis of the Cohesion
and Regional Funds, we adopted the R&D version of QUEST III (see Roeger, W. et al.,
2008116
) which is a semi-endogenous growth framework based on Jones (2005)117
.
The model belongs to the class of New-Keynesian dynamic general equilibrium (DGE)
models that are now widely used in economic policy institutions. It provides a fully
micro-founded, integrated and optimization-based representation of the economies of the
Member States.
QUEST is structured around building blocks which represent the behaviour of
fundamental economic agents and interactions. The model describes fully the dynamics
of the system in a general equilibrium framework where changes in the conditions for a
particular block are transmitted to the other blocks though various market interactions.
The model allows also considering a wide range of policy interventions being closely
related to the EU Regional Policy, from support to R&D to the provision of public
infrastructure. The model covers the 27 Member States and their trade links among each
other, and with the rest of the world. The model also allows for international R&D
spillovers in order to capture the fact that technology is not fully appropriable and that
innovation can also be absorbed by non-innovative agents (e.g. through imitation). In this
respect, the model takes into account the fact that programmes implemented in a
particular Member States produce an impact in the other countries by affecting the
intensity of trade and/or knowledge flows.
In general, the analysis is conducted by simulating and comparing two scenarios. The
baseline scenario relies on the natural trend in the economy, excluding any policy
intervention. The second scenario features the policy interventions for cohesion and rural
development and, by comparison with the baseline, it allows for the analysis of the
impacts of the policy on the economy. For a given variable the difference between the
values obtained under the two scenarios is interpreted as the impact attributable to the
policy, and it is expressed as a percentage deviation from the baseline118
.
Further reading
116 Roeger W., Varga J. and J. in ’t Veld (2008), "Structural reforms in the EU: a simulation based analysis using the QUEST model with endogenous growth", European
Economy Economic Paper N° 351. http://ec.europa.eu/economy_finance/publications/pages/publication_summary13529_en.htm
117 Jones, C. (1995), "R&D-based models of economic growth", Journal of Political Economy, 103(4):759-84.
118 The baseline is established on the basis of assumptions concerning the trends of key variables which is common practice in modelling exercise. The results, which correspond
to the difference between the baseline and the 'with-policy' scenarios, are relatively independent from the baseline.
95
Varga J. and J. in 't Veld (2014), "A model-based analysis of the impact of Cohesion
Policy expenditure 2000-05: Simulations with the Quest III endogenous R&D model,"
Economic Modelling 28: 647-663;
http://ec.europa.eu/economy_finance/publications/pages/publication16016_en.pdf
Rhomolo
RHOMOLO is a dynamic and spatial computable general equilibrium model developed
jointly by the DG REGIO and the Joint Research Centre of the European Commission.
The model simulates the impact of policy interventions on the economies of 267 EU
NUTS-2 regions, taking into account the spatial spill-overs that are most relevant for the
policy.
The model heavily borrows from New Economic Geography and endogenizes the
distribution of economic activity across the regions concerned, therefore allowing to
capture the impact of the policy on location choices and spatial organization of economic
activities in the EU.
The model distinguishes investment in transport infrastructure from the other investment
in infrastructure. Such investments are indeed assumed to reduce transport costs inside
and between the regions concerned which makes the model capable of simulating the
specific impact of this type of interventions. Improvement in transport infrastructure
implies that regions have a better access to the EU markets and hence which allows
increasing their exports and hence boosts the level of economic activity. Enhanced
accessibility also means a reduction in the price of imported intermediate goods and of
consumption which contributes to reduce firms' production costs and increase real
income of households119
.
119 Detailed documentation on the model is available at https://ec.europa.eu/jrc/en/rhomolo.