On Wednesday 2 May, the President of the European Commission, Jean-Claude Juncker and his Budget Commissioner, Günther Oettinger, announced a reduction in the envelope for the next Cohesion Policy of 7% for the 2021-2027 period, as well as a number of different internal developments. The figures put forward by the Commission were subject to bitter discussions involving a number of experts, who rather expect a 10% budget reduction.
The budget put forward by the European Commission for European Regional Development Funds (ERDF) and the Cohesion Fund is therefore €273 billion at current prices or €242 million at constant prices for 2018 judging by the prices annexed to the Commission communication. The European Social Fund (ESF) in its current casting includes a budget of €101 billion (current prices) or €89.6 billion in constant prices for 2018, as opposed to €121 billion for the current budget cycle in current prices.
This would mean a 7% reduction according to the Commissioner for the Budget. Moreover, as we go to press, this figure had been discussed by the sources we had contacted, which were looking at a reduction in real terms of 10%, which would bring us back to the forecasts put forward by the Commissioner in 2017 (see EUROPE 11911). Another source forecast a 15% reduction.
In constant prices for 2018, the European Regional Development Fund (ERDF) will therefore have a budget of €200 billion. The ERDF currently has a budget of €279 billion (current prices) for the 2014-20 period, according to the European Commission’s CohesionData website. Similarly, for the Cohesion Fund, the Commission is proposing a budget of around €41 billion in prices constant to 2018. This will include €75 billion for the 2014-20 period in current prices.
In this regard, one source criticised the treatment of territorial cooperation, which will receive a budget of €9.5 billion in current prices. One source close to the dossier said that this would mean a budget reduction of 20%.
Thoroughgoing changes
The Commission communication includes many changes to Cohesion Policy, beginning with a flagging up for structural reforms (by way of the support programme for structural reforms that will have €25 billion), with a strengthened link between the European budget and European Semester that will include regional specificities. The specificities will subsequently be included in the country specific recommendations.
The allocation of funds will be on this basis, in addition to the per capita GDP indicator, unemployment rates (particularly youth unemployment), climate change and, especially, the reception and integration of migrants in the long-term. On this latter point, all structural and investment funds will include a section focusing on migration and long-term integration. The Asylum Migration and Immigration Fund (AMIF) will focus on short-term integration. The specificities of the outermost regions (OR) will also be taken into account.
The Commission intends to simplify the Cohesion Policy by aligning implementation rules with the different funds (ERDF, Cohesion Fund, European Social Fund, EAFRD, EMFF, AMIF and ISF-Borders and Visa (integrated border management fund) with a differentiated and streamlined control system for the regions and member states that have good track records. The Commission also wants to introduce flexibility to the budget cycle to enable programming adjustments in an effort to respond to emergencies. The Commission also intends to increase the Introduction of financial instruments through the voluntary use of a new InvestEU fund, inspired by the Juncker Plan experience.
Co-financing rates will be revised upwards to increase the responsibility of the member state and regions as well as the impact of Cohesion Policy, explains the Commission. The latter also wants to reintroduce the N+2 rule (as opposed to the current N+3) in order to honour payment commitments made.
A horizontal mechanism between the European funds and respect for the rule of law has also been included (see other article).
ESF +
There is still a doubt amongst the observers about what roll the European Social Fund + will play and whether it will still be under shared management or direct management. One source also regretted the lack of clarity in the European Commission documents. The commission proposes to pool the resource of European Social Fund, the Youth Employment initiative, the Fund for European Aid to the Most Deprived, the Employment and Social Innovation programme and the Health programme into one comprehensive instrument. The ESF+ concentrates on Youth employment, upgrading workers' skills, social inclusion and poverty reduction.
Concerns
Poland was one of the member states that swiftly responded by welcoming the fact that there had not been any drastic cuts in cohesion policy.
In Parliament, the dissatisfaction was palpable and even included the ranks of the EPP. Marc Joulaud (EPP, France) regretted the reduction in the cohesion policy envelope and pointed out that cohesion policy was not obsolete. In response to a question put to her by EUROPE, Isabelle Thomas (S&D, France) criticised the Commission proposals and denounced the “made up figures” and anticipated budget cuts of 10% for cohesion policy. Younous Omarjee (GUE/NGL, France) also sharply criticised the Commission proposals and saw them as a misdirection of the Union's missions. The President of ALDE, Guy Verhofstadt (Belgium), praised the Commission's courage.
The Committee of the Regions responded bitterly and calculated a budget cut of 10%, as well as expressing concern that cohesion policy will be fragmented and centralised and, overall, regretted the lack of ambition shown by the European Commission. It also pointed out that the local and regional authorities had a role to play in the new priorities, particularly in migrant management.
Civil society organisations, such as the European Confederation of Trade Unions (ETUC) provided a robust response and announced that it was impossible for them to accept the budget cuts announced by the European Commission. The Council of European Municipalities and Regions (CEMR) said that it would have a negative impact on the local authorities. One source from the Conference of Peripheral and Maritime Regions (CPMR) also announced that it was concerned by the Commission announcements and highlighted the lack of clarity in the Commission's announcement about the figures put forward, particularly those on the ESF. Eurocities welcomed the announcements made by the Commission to promote the new priorities and called for the urban dimension of cohesion policy to be strengthened.
The Commission will present its proposal for the next cohesion policy on 29 May next. (Original version in French by Pascal Hansens)