What changed

EXPLANATORY STATEMENT - SUMMARY OF FACTS AND FINDINGS

Follow-up to the European Parliament non-legislative resolution on cohesion policy 2014-2020 - implementation and outcomes in the Member States

As a decade of cohesion policy investments draws to an end, the time has come to take stock of the policy’s implementation and achievements during the past programming period and to contribute to the reflection on its future.

Rapporteur: Andrey NOVAKOV (EPP / BG)

Cohesion policy investments across the EU have resulted in unparalleled positive impacts on regions, cities, rural, border and remote areas. Directly or indirectly, every EU Member State has experienced the positive effects of financing through the EU budget. EU investments in transport infrastructure, energy, small and medium-sized enterprises (SMEs), skills, innovation, agriculture, reforms and other fields build the EU in times of peace and rebuild it in times of crisis. The multi-priority investment approach of cohesion policy, combined with its shared management have contributed to the EU’s priorities: SME support, research and innovation, digitalisation, farming, urban infrastructure, tourism, large transport infrastructure, culture and education, healthcare, cross-border projects, the energy transition, energy efficiency, climate and environment. The outcomes of the thousands of local projects confirm the indispensable role of regional investment through cohesion policy and consolidate its role and visibility in the multiannual financial framework.

Reference number: 2023/2121 (INI) / A9-0049/2024 / P9_TA(2024)0174

Your rapporteur’s conclusions and recommendations are based on the wealth of available data on the implementation of the main cohesion policy funds 2014-2020 - European Regional Development Fund (ERDF), Cohesion Fund (CF), European Social Fund (ESF) and Youth Employment Initiative (YEI). Data is naturally scarcer on the cohesion instruments adopted as a response to the COVID-19 pandemic and the recent Ukraine and energy crises - the Coronavirus Response Investment Initiatives (CRII and CRII+), REACT-EU (Recovery Assistance for Cohesion and the Territories of Europe), CARE (Cohesion’s Action for Refugees in Europe), FAST-CARE (Flexible Assistance to Territories) and SAFE (Supporting Affordable Energy). This is because not enough time has passed to allow for proper insight. Nevertheless, your rapporteur believes that, despite certain limitations, some lessons can be drawn from a preliminary assessment of investments.

Date of adoption of the resolution: 14 March 2024

To draft this report, your rapporteur has examined not just the effectiveness of the implementation of 2014-2020 funds, but also the actual effectiveness of the policy: after all, an increased focus on performance and results was one of the key features of this period. In other words, beyond financial implementation, the rapporteur looked at available data on the actual results of the investments to try to determine how the available cohesion instruments have delivered on the cohesion objective enshrined in the Treaty, as well as on the priorities of the Union strategy for smart sustainable and inclusive growth.

Competent Parliamentary Committee: Committee on Regional Development (REGI)

This assessment exercise has meant that the rapporteur has grappled with the challenges that cohesion policy is facing, some of which have been extensively discussed by the Committee on Regional Development (REGI) in the last parliamentary term. Despite the policy overhaul that took place before the current programming period, cohesion policy is once again at a turning point: it has to compete with other instruments and delivery models, and is expected to deliver on a growing set of long-term priorities while being increasingly called on to respond to emergencies. The survival of cohesion policy will depend on a successful conclusion of the 2014-2020 period and an effective implementation of the 2021-2027 programmes, as well as on its ability to reinvent itself, adapt to a changing world and tackle emerging challenges. The rapporteur’s intention for the conclusions and recommendations of this report to serve as input for the ongoing interinstitutional debate on these matters and thus help shape the future cohesion framework.

Brief analysis/ assessment of the resolution and requests made in it:

Procedure and sources

The resolution takes stock of cohesion policy’s implementation and achievements during the past programming period and contributes to the reflection on its future. By providing concrete examples of the achievements of cohesion policy, it acknowledges that cohesion policy, through its multi-sectoral approach and shared management, was the EU’s main investment policy in 2014-2020, effectively supported its Treaty-based objective of achieving economic, social and territorial cohesion across the EU and contributed significantly to the Union’s priorities. In addition,to benefits such as lasting positive impacts on a variety of regions and cities, the importance of investment at regional and local level, and the effectiveness of measures introduced under cohesion these last years to mitigate the socio-economic impact of different crises, it also lists some implementation challenges, particularly in certain Member States, which were exacerbated at the end of programming period, due to the crises, the need to implement other EU instruments such as the Recovery and Resilience Facility (RRF), and the preparation of the 2021-2027 programming. In this respect, the resolution regrets the late adoption of both the Multiannual Financial Framework (MFF) and the regulatory framework for cohesion and suggests in the future that the MFF-related provisions from the Common Provisions Regulation (CPR) be separated from the other provisions, to enable Member States to better anticipate the preparation of programming documents in addition to other recommendations for continued focus on regional support and investments under a modernised cohesion policy.

Your rapporteur has relied on the following sources, among others:

Response to requests and overview of actions taken, or intended to be taken, by the Commission:

 discussions held in the REGI committee with the Commission and the permanent representatives of the Member States on the implementation of cohesion policy funds (an ongoing exercise that began in July 2022);

(Paragraph 18) The Commission takes note of the Parliament’s position regarding the eligibility of all EU regions under the post-2027 EU cohesion policy. The Commission recognises that structural challenges as identified in the Commission’s 9th Cohesion Report adopted in March 2024 (climate transition, demographic change, technological transformation, etc.) affect all regions – albeit to varying extents. It is however too early to pre-empt future proposals for the post-2027 Multiannual Financial Framework.

 publications by Parliament’s research services, including: Parliament’s PolDep B study on absorption rates (preliminary results);

(Paragraph 19) The Commission is committed to implementing Article 174 of the Treaty on the Functioning of the European Union (TFEU) and recalls that cohesion policy contributes to the development of all types of territories. The legal framework of cohesion policy offers multiple possibilities to address the specific needs of different EU territories. The Urban Agenda for the EU is an inter-governmental initiative of Member States.

 an analysis of available data, including the open databases on cohesion policy managed by the Commission’s Directorate-General for Regional and Urban Policy (DG REGIO), Cohesion Open Data Platform, the Coronavirus Dashboard and Kohesio;

(Paragraph 21) The Commission is committed to supporting the outermost regions’ socio-economic development and to ensuring special conditions for these regions in the application of EU law in line with Article 349 TFEU. In the funding period 2021-2027, cohesion policy strongly supports the outermost regions with tailor-made conditions including a specific allocation to help them cope with their additional costs, a new interregional co-operation strand under Interreg to help them co-operate with their neighbours, and a higher allocation for technical assistance. Outermost regions are considered less developed regions – independently of their Gross Domestic Product (GDP) – for the determination of the co-financing rate and for the thematic concentration of the European Regional Development Fund (ERDF). The Communication ‘Putting people first, securing sustainable and inclusive growth, unlocking the potential of the EU’s outermost regions’ adopted under this mandate aims to reflect outermost regions’ specificities across all EU policies, in legislative proposals, policy initiatives, tools and programmes, to support living conditions, recovery, development and sustainable growth – in line with Article 349 TFEU.

 Commission sources, including the eighth report on economic, social and territorial cohesion and the annual implementation reports of the EU’s Structural and Investment (ESI) Funds;

(Paragraph 22) In accordance with the Treaty, the Commission attaches particular attention to the situation of EU border regions. The 9th Cohesion Report highlights the challenges for regions at the EU’s external borders, in particular those bordering Russia, Belarus and Ukraine since the start of Russia’s war of aggression in Ukraine, as well as southern peripheral regions and outermost regions exposed to migratory pressures. As highlighted in the Commission’s Communication ‘Boosting growth and cohesion in EU border regions’, EU border regions face structural disadvantages, including persistent cross-border legal and administrative obstacles that hinder their economic and social development. Beyond financial support provided by Cohesion Policy and other EU policies and instruments, the Commission has recently proposed an amended proposal for a regulation ‘Facilitating cross-border solutions’, which would give Member States a standard procedure for resolving legal and administrative obstacles that potentially undermine cross-border interactions and the development of cross-border regions. The Commission welcomes the Parliament’s continued support for this proposal. The examination of the proposal by the co-legislators is ongoing.

 a European Parliamentary Research Service review of studies by other EU institutions, including the European Court of Auditors (ECA) and the European Investment Bank (EIB), policy papers and evaluations of the policies implemented by individual Member States;

(Paragraph 23) The Commission takes note of Parliament’s proposal to introduce stricter criteria in the regulatory framework, which would thus have a stronger impact on the eligibility rules. The Commission recalls that the ‘do no significant harm’ principle already applies under 2021-2027 cohesion policy programmes. To explore areas for improvement in the application of the principle the Commission will take stock of lessons learnt from the implementation of this principle under cohesion policy programmes, as well as under the Recovery and Resilience Plans (RRPs). Finally, the provisionally agreed amendment of the EU Financial Regulation provides that the next Multi-annual Financial Framework would be subject to the ‘do no significant harm’ principle, where feasible and appropriate. On climate-related spending, the Commission will take stock of the lessons learnt from the implementation of the climate-tracking system and climate -spending targets under cohesion policy programmes 2021-2027, as well as under the RRPs.

 the work of the high-level group on the future of cohesion policy;

(Paragraph 26) The Commission takes note of Parliament’s proposal to create a distinction within the future Common Provisions Regulation between the content-related aspects and financial aspects. While it is premature to anticipate any changes, the Commission notes the difficulty of decoupling policy and programming aspects from the financial resources necessary to achieve them as well as the fact that in previous MFF negotiations, bracketing financing provisions for Council discussion in the MFF negotiations has not contributed to the delayed adoption of the legal bases and subsequently the programming process.

 the public hearing on simplification of cohesion policy held in the REGI Committee on 23-24 October 2023,

(Paragraph 27) The Commission takes note of Parliament's warning that the existence of multiple funds may hinder the effective implementation of cohesion policy. Such additional EU funding instruments were created to address specific needs on an ad-hoc basis. The Commission recognises the importance of increasing synergies and complementarity between the various EU financing instruments to promote economic, social, and territorial cohesion across all EU regions.

 the interparliamentary committee meeting on the future of cohesion organised by the REGI Committee on 7 November 2023,

(Paragraph 31) The Commission recognises the importance of evaluating the transformative nature of the investments and their impact. The ex-post evaluation of the European Regional Development Fund and Cohesion Fund in the period 2014-2020, together with the ex-post evaluation of the European Social Fund, will examine the effectiveness, efficiency and impact of investments co-financed by these Funds, their coherence with other policies, their relevance, and EU added value. It will seek to identify factors contributing to the performance of these investments under different socio-economic conditions and their contribution to growth, sustainable development, and job creation as well as other key elements such as institutional capacity and reform, crisis response and territorial instruments.

 contacts with the Commission, managing authorities and regional and local authorities.

The ex-post evaluations shall be carried out by the Commission, in close cooperation with the Member States and managing authorities. According to the Common Provisions Regulation (Article 57), evaluations shall be completed by 31 December 2024. The Commission shall prepare by 31 December 2025 a synthesis report outlining the main conclusions of ex-post evaluations.

Cohesion policy in the 2014-2020 period

(Paragraph 33) The 2021-2027 regulatory framework introduced a series of wide-ranging simplification measures including the use of simplified cost options, financing not linked to costs, the single audit principle, risk-based management verifications and an option for Member States to use their own national system for management verifications. The rules for extrapolating error rates remained unchanged for the new programming period, in order not to create additional administrative burden, while in 2022 the Commission also further simplified the sampling requirements.

A new framework

(Paragraph 35) The Commission welcomes the Parliament’s position for a modernisation of delivery model towards performance-based implementation and a linkage between investments and growth-enhancing reforms. Both the 9th Cohesion Report and the mid-term evaluation of the Recovery and Resilience Facility provide insights in this regard. The Commission agrees with the Parliament that an effective involvement of regional and local authorities and partners is key in setting the targets for cohesion policy investments, as well as in their implementation and monitoring.

In the 2014-2020 period, a single set of rules was introduced to cover the EU’s five Structural and Investment Funds for reasons of coordination and complementarity, as well as in order to establish a robust link with the Union strategy for smart, sustainable and inclusive growth (Europe 2020 strategy). The ERDF, the CF and the ESF became one of the investment pillars of the 2020 strategy, while at the same time contributing to cohesion aims. Article 9 of the Common Provisions Regulation (CPR) translated the priorities of the Europe 2020 strategy into 11 thematic objectives (TOs), which each of the ESI Funds needed to support.

(Paragraph 37) Digital technologies play an important role in increasing transparency and accessibility of services and documents and to accelerate procedures. The Commission is closely monitoring the implementation of the requirements related to e-Cohesion in the Common Provisions Regulation (Article 69(8) and Annex IV of (EU) Regulation 2021/1060). The Commission agrees with the Parliament on the need to widen the use of digital technologies and solutions and is following this up with Member States on a regular basis.

In addition, the ERDF, the ESF and the CF had the specific goal of supporting investment for growth and jobs in all categories of regions. The ERDF also supported the territorial cooperation goal.

(Paragraph 38) The EU Financial Regulation recast will allow the Commission and the Members States to enhance the existing mechanisms to detect and fight irregularities, fraud, and corruption as well as transparency in the use of taxpayers’ money through an improved Financial Transparency System.

To round up the strategic programming approach, the CPR created a stronger link with country-specific recommendations and provided tools and guidance to achieve synergies between the funds, such as the possibility of multi-fund programmes, integrated territorial investments, community-led local development and joint action plans.

(Paragraph 39) The EU Financial Regulation recast sets out a new IT integrated system for data mining and risk scoring to be used in all modes of EU budget implementation, to identify risks of irregularities, fraud and conflicts of interest which will be fed also by the Members States. Moreover, with some limitations included in the political agreement between the Parliament and the Council, the use of the Early Detection and Exclusion System (EDES) will be extended to the shared management EU budget implementation mode.

In addition, the new framework introduced new mechanisms to improve the policy’s effectiveness, such as the performance framework, the performance reserve and the ex ante conditionalities. It also included important simplification measures, made reporting requirements lighter, introduced e-cohesion and took some steps towards results-based management.

(Paragraph 40) Based on results of the evaluations of the European Anti-Fraud Office (OLAF) and the European Public Prosecutors Office (EPPO) Regulations, the review of both regulations is planned for 2025 – 2026. One of the key elements of the evaluation of the OLAF Regulation will be the cooperation between OLAF and the EPPO, with a view to ensuring complementarity of their mandates.

Lastly, the new framework enhanced the territorial dimension of the policy when compared to the previous programming period. The Common Strategic Framework annexed to the CPR and the European Code of Conduct on Partnership are an example of this.

(Paragraph 42-43) Pursuant to Regulation 2020/2092 (‘Conditionality Regulation’), the Commission, may propose to the Council to adopt measures if breaches of the principles of the rule of law in a Member State affect or seriously risk affecting the sound financial management of the Union budget or the protection of the financial interests of the Union in a sufficiently direct way. That means that breaches of the principles of the rule of law must have an impact on the Union budget, for them to fall under the scope of the Conditionality Regulation. Measures adopted by the Council under the Conditionality Regulation may also concern cohesion public funding, as any Union funding. Sectorial rules make the payment of cohesion policy funding conditional on the fulfilment of certain so-called enabling conditions, including the effective application and implementation of the Charter of Fundamental Rights. The Commission, pursuant to its obligations under Article 5(5) of the Conditionality Regulation, will do its utmost to ensure that any amount due from government entities or Member States is effectively paid to final recipients or beneficiaries. Under the Conditionality Regulation, the Member State concerned remains bound by their obligation to make the due payments to final recipients and beneficiaries of Union funds. The Commission has provided information and guidance to that end in the guidelines on the application of the Regulation adopted on 2 March 2022.

Cohesion as a crisis response tool

(Paragraph 45) As highlighted in the 9th Cohesion Report, climate change is identified as a major challenge for cohesion if left unaddressed. The effects of climate change in the EU may exacerbate regional disparities, especially in the regions whose economic performance is below the EU average such as the Mediterranean and south-eastern EU regions, calling for continued targeted support under cohesion policy, including support to local and regional authorities, disadvantages areas and communities.

From 2020, several major crises have shaken the EU and the wider world. The COVID-19 pandemic, the Russian war of aggression against Ukraine and the energy crisis it triggered have had a serious impact on people and businesses in all EU regions. Cohesion policy played a major role in the EU’s response to this difficult situation. In 2020, a series of amendments to the 2014-2020 rules, CRII and CRII+, granted Member States greater flexibility to use cohesion funds to support vulnerable people, businesses and the health sector. In 2021 extra funds were made available through REACT-EU to support future-oriented measures.

(Paragraph 48) The Commission encourages the involvement of the private sector alongside the public sector for investments in sustainable development. In this regard, the Commission recognises the crucial role of small and medium enterprises (SME) in innovation including for circular economy and resource-efficient production, as emphasized also in the recent SME Relief Package, and is committed to continue acting in this domain, including by promoting and supporting the uptake of ready-for-market innovations by SMEs, while encouraging Member States to do the same.

In 2022, the flexibilities introduced through CARE and FAST-CARE helped Member States reallocate available 2014-2020 funding to assistance for people fleeing Ukraine. The 2014-2020 framework was further modified by SAFE as part of RePowerEU. Thanks to this initiative, cohesion policy was able to help vulnerable households and SMEs cope with the sharp hike in energy costs resulting from the war in Ukraine.

(Paragraph 49) The Commission recognises that achieving a carbon-neutral energy sector requires further upscaling of renewables and there is substantial untapped potential in this regard. The 9th Cohesion Report shows the potential to produce renewable energy from wind and solar power or for carbon capture and storage in natural ecosystems in many rural and less developed regions. In this regard, access to funding is essential. With its place-based approach, cohesion policy can assist these territories to unlock their potential. The Commission and the European Investment Bank (EIB) are conducting a study on promoting circular economy funding and financing in the EU, which will look at investment gaps and regulatory barriers at different levels in Member States.

Findings on implementation

(Paragraph 51) The Commission underlines the importance of all three complementary pillars of the Just Transition Mechanism. The Commission will assess the implementation of the Just Transition Fund (JTF), drawing the relevant lessons from the mid-term review planned in 2025 to optimise the design of such assistance.

The rapporteur has looked at the implementation of investments made under the 2014-2020 cohesion policy legal framework, based on Regulation (EU) No. 1303/2013. The main funds through which the policy was delivered (the ERDF, the CF and the ESF), together with the Youth Employment Initiative (YEI), have provided a total of EUR 449 billion for the 2014-2020 period (84 % of the planned EUR 532 billion). These figures include national cofinancing and the additional resources provided under REACT-EU. Without taking into account REACT-EU funds, absorption should reach 89 %.

(Paragraph 52) The cohesion policy aims at ensuring the social, territorial, and economic cohesion in the EU, leaving no one behind in the climate transition by supporting the most affected territories and workers. The Commission takes note of Parliament’s position in favour of extending the JTF after 2027, maintaining its anchoring in the Common Provisions Regulation, with the requisite financial endowment, extending its scope and applying the principles of shared management and partnership. While it is too early to pre-empt future proposals for the post-2027 MFF, the Commission agrees that the magnitude of challenges raised by climate transition may exceed the current scope and ambition of the JTF. The scope and ambition of the role of cohesion policy in addressing the climate transition will be part of the assessment for the post-2027 MFF.

For payments, the 2014-2020 period has followed the usual project life cycle, although more slowly. Payments started late and were slow at the beginning of the period (8 % by end 2016). Although they accelerated substantially from 2017 onwards, as of 2018, most Member States had slower payment rates than at the equivalent stage in the previous programming period. This is arguably due to the fact that the 2014-2020 framework was adopted fairly late, just a few days before its official start, and that pressure to implement was lower than in 2007-2013 as a result of the change to the decommitment rules (n+3).

(Paragraph 53) The European Social Fund Plus (ESF+) has been supporting the Member States to tackle social inequalities by investing in areas such as access to employment, including by promoting gender-balanced labour market participation, access to education and training, lifelong learning, active inclusion and promotion of equal opportunities, the integration of marginalised communities, access to services, etc. This support will continue until the end of the current programming period, while the decisions on the future cohesion policy, including the ESF+, will be taken in the context of the next MFF.

As of 2020, implementation has been affected first by the COVID-19 pandemic and then by the refugee and energy crises. The reprogramming effort under CRII(+) and the possibility of 100 % co-financing through CARE, among other measures, have contributed to accelerating expenditure rates in 2020, 2021 and 2022. Still, at the end of 2022 the absorption rate (including REACT-EU) was just 77 %.

(Paragraph 56) As a reaction to Russia’s war of aggression against Ukraine and to address the socio-economic difficulties in the EU regions bordering Russia and Belarus, the Commission redirected the Interreg resources from these two countries into other neighbouring countries (such as Ukraine and Moldova), while enabling the integration of the affected EU border regions into other Interreg programmes. The mid-term review of Interreg programmes also provides an opportunity for Member States to better reorient resources towards alleviating the social and economic effects of the war in these regions. Other targeted regional support in this context includes the “Catching-up Regions Initiative” and the Technical Support Instrument 2024.

The spending rate kept accelerating in the second half of the period and expenditure has significantly caught up 2023, so that the same percentage has been reached as at the same point in 2007-2013. However, overall financial implementation has been slower than in the previous period. Several programmes face decommitments for not reaching their payments targets, and significant differences can be observed across Member States, regions and at programme and TO level. Payments for transition regions tend to be slower, as does expenditure under TO5 (climate change adaptation), TO4 (low-carbon economy), TO11 (administrative capacity) and TO6 (environment).

(Paragraph 58) The Commission takes note of the Parliament’s position in favour of a stronger association of the European Agricultural Funds for Rural Development (EAFRD) with the Common Provisions Regulation (CPR) and its streamlining in regional development and recalls that the Common Agricultural Policy (CAP) strategic plan regulation and the CPR provide the legal basis for the EAFRD as part of the CAP Strategic plans and not part of the CPR anymore. Both the CAP Plans and the EU cohesion programmes under the CPR have explicit coordination arrangements for each Member State ensuring synergies for the benefit of rural areas. These are strengthened by Commission internal coordination arrangement concerning all EU funds, and the Long-term Vision for Rural areas, whose objectives are shared by these funds.

For funding available under REACT-EU, to date, just about 50 % of the total available funds have been paid out to Member States. There is a risk, already pointed out by the ECA, that Member States are rushing to spend the available funding before the end of the period and paying insufficient attention to performance and value for money.

(Paragraph 61) The Commission duly takes note of the Parliament’s concerns regarding any unfavourable consequences that a ‘statistical effect’, following an enlargement, could have on cohesion policy eligibility. As highlighted in the Commission’s Communication on Pre-enlargement reforms and policy reviews, cohesion policy objectives remain valid in a wider Union, both in current and future Member States, while a comprehensive reflection on the design of cohesion policy will be needed in the context of future enlargements.

In terms of absorption patterns, roughly one third of Member States are late absorbers. As of November 2023, the average payment rate in the EU was 86 %, with some of the older and larger Member States lagging significantly behind. Although it is likely that these countries will accelerate their performance towards the end of the period, their present persistently low absorption patterns suggest underlying structural problems, which regularly result in great pressure on authorities towards the end of the programming period, and could eventually lead to the loss of available funds. It should be noted that Parliament is advocating the postponement of the closure date forESI Funds to 31 December 2024.

The 9th Cohesion Report provides evidence that the role of cohesion policy has been pivotal for socio-economic convergence following the latest enlargements of the EU. At the same time, it has also pointed out the need to tackle the limited administrative capacity of implementing authorities and beneficiaries in candidate countries and potential candidates, which may create challenges for absorption and the quality of investment. Improving this capacity with technical assistance, phasing-in periods, and other measures – such as training and capacity building – will be key to ensure that the EU support effectively contributes to upward socio-economic and territorial convergence and that the Union’s financial interests are protected.

We can therefore conclude that a slow spending rate is a major problem in certain Member States. Agreements on the multiannual financial framework (MFF) are reached late and this consistently delays the adoption of the regulatory framework for cohesion in each programming period. This should also be better tackled in future programming periods. In addition, previous analyses show that the delays in the spending of EU structural funds tend to accumulate across programming periods.

(Paragraph 63) The provisional agreement on the economic governance review provides for the netting-out of national expenditure on co-financing of programmes funded by the Union from the single operational indicator (net expenditure). The Commission is still working on the operationalisation of this provision in the new Preventive Arm Regulation. Eurostat will have to set up a framework for reporting on national co-financing. Until the framework for the collection and provision of such data is established, the Member States should be allowed to rely on estimates.

However, absorption is just one aspect of implementation. In his preparatory work for this report, your rapporteur has identified a series of additional factors that have influenced implementation and the effectiveness of cohesion policy in 2014-2020, including administrative burdens, the capacity of local and regional authorities, the price crises and the labour shortages that the EU has recently experienced. These are the basis for the recommendations in the motion for resolution.

(Paragraph 64) The European Semester is the key tool for effective coordination and surveillance of broader economic and employment policies of the Member States, in accordance with Articles 121 and 148 TFEU. The new economic governance (pending final adoption) reconfirms the objectives of the European Semester as a framework for multilateral surveillance for closer coordination of economic policies and sustained convergence of the economic and employment performance of Member States. Cohesion policy funds are also aligned with the European Semester process. In 2024, the European Semester will take stock of the ongoing implementation of cohesion policy programmes and the national Recovery and Resilience Plans, exploring how they complement each other in terms of funding and policy outcomes, with a focus on reforms acting as key enablers for investments at different levels. The 2024 European Semester cycle will also provide orientations in view of the forthcoming mid-term review of cohesion policy programmes. As part of the cohesion policy mid-term review, Member States can review cohesion programmes to tackle those areas where there are pressing needs and emerging challenges, while maximising synergies.

Programming, reprogramming, implementation and closure of cohesion investments affect policy outcomes nationally but most of all locally, at regional and sub-regional level. The CPR for cohesion policy and the sectoral regulations covered by the CPR have been improved over time. The changes introduced to the 2021-2027 regulations addressed a number of challenges. However, one area of improvement that has not yet been sufficiently tackled is implementation at local level through local authorities, including municipalities. Therefore, your rapporteur has focused the report on recommendations for the local level.

(Paragraph 65) The Commission shares the view on the importance of ensuring that other EU and national policies do not undermine the achievement of cohesion objectives i.e. the economic, social and territorial cohesion across all EU regions. In addition, to ensure that the territorial specificities are considered in policy making, the Commission is committed to promote, when relevant, Territorial Impact Assessments when policies and legislation are designed. According to the Commission’s Better Regulation agenda all impact assessments include a screening process to identify important asymmetric effects of Commission legislative proposals to different EU territories, such as cross-border, rural, insular, mountainous, outermost, or sparsely populated areas. This screening methodology demonstrates whether there are disproportionate territorial consequences, which merit a territorial impact assessment.

MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION

(Paragraph 66) The European Semester is instrumental to implement the European sustainable growth strategy based on the concept of competitive sustainability, bringing together the environment, productivity, stability, and fairness. It provides specific guidance to Member States on where structural reforms and investment towards a more sustainable and competitive economic model are most needed to unlock the competitiveness potential of each Member State. The aim is to ensure that the green and digital transition is fair and inclusive, paying particular attention to the regions, industries and workers that will have to make the largest transformations, leaving no one behind. Economic policy coordination and democratic accountability go hand in hand. Engagement with the European Parliament, the Council, social partners, and other key stakeholders remains a key feature of the European Semester. The Commission will continue the dialogue with the Member States through the annual cycle of policy coordination and will reiterate the invitation for Member States to also involve national parliaments, regional and local authorities, social partners, and all other relevant stakeholders.

on cohesion policy 2014-2020 - implementation and outcomes in the Member States

(Paragraphs 68-70) The Commission agrees with the Parliament on the need to reinforce the effectiveness of the partnership principle and multilevel governance in cohesion policy – being necessary to improve ownership and increase the quality and impact of programmes. The Commission will establish, together with relevant partners, a collection of best practice in implementing the partnership principle to support cohesion policy stakeholders to fully embrace this core principle, currently regulated by Article 8 of the Common Provisions Regulation and the European Code of Conduct on Partnership (Delegated Regulation (EU) No 240/2014).

(2023/2121(INI))

(Paragraph 73) The Commission financially supports the fight against child poverty and the implementation of the Child Guarantee. The European Social Fund Plus has embedded a specific child perspective in all its actions - childcare and support to children - by supporting targeted actions and structural reforms to tackle child poverty. It therefore contributes to the implementation of the European Child Guarantee, notably through funds programmed under Secondary Theme 6 (Addressing Child poverty). Currently, EUR 6,1 billion (EU amount) is programmed under this Secondary Theme, financing actions in the areas of education, social inclusion, special care for children with disabilities, childcare, etc.

The European Parliament,

(Paragraph 75) The Commission will assess the implementation of climate adaptation and disaster prevention and preparedness investments, drawing the relevant lessons from the ex-post evaluation of 2014-2020 and from the mid-term review planned in 2025 to optimise the design of such assistance.

– having regard to Articles 174 and 349 of the Treaty on the Functioning of the European Union (TFEU),

The outermost regions are highly exposed to the negative effects of climate change and the 2022 Communication stresses the importance of climate adaptation and cooperation with neighbouring regions and third countries. This is why in 2022 and 2023 the Commission fostered exchanges of good practice and solutions to common adaptation challenges between the outermost regions and their neighbouring countries and territories; and published a compendium of such good practices to inspire and facilitate cooperation in addressing common challenges.

– having regard to Regulation (EU) No 1303/2013 of the European Parliament and the Council of 17 December 2013 laying down common provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund, the European Agricultural Fund for Rural Development and the European Maritime and Fisheries Fund and laying down general provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund and the European Maritime and Fisheries Fund and repealing Council Regulation (EC) No 1083/2006 (the Common Provisions Regulation),

(Paragraph 76) In the 2021-2027 period, the cohesion policy regulations provide dedicated territorial policy objective 5 ‘Europe closer to citizens’ to tackle territorial and local challenges using community-led local development (CLLD), integrated territorial investment (ITI), or other tools supporting initiatives designed by Member States. Almost all Member States have programmed support for place-based investments under this objective (ca. EUR 19 billion) and twenty of them use ITI with EUR 23 billion planned support from cohesion policy funds - mostly in functional urban areas, but also in cities and urban neighbourhoods, rural areas, mountain, and island regions. About half the Member States plan to support community-led local development with more than EUR 1.6 billion. Nineteen Member States have planned more than EUR 14 billion for ‘other territorial tools’ implemented in both urban and rural areas.

– having regard to Regulation (EU) No 1301/2013 of the European Parliament and the Council of 17 December 2013 on the European Regional Development Fund and on specific provisions concerning the Investment for growth and jobs goal and repealing Regulation (EC) No 1080/2006,

(Paragraph 77) The Commission agrees that promoting a more balanced territorial development is crucial to mitigate the strong polarisation in some Member States between capital regions and large metropolitan centres on the one hand, and rural regions with lower population density on the other. While it is too early to discuss concrete elements of the post-2027 proposals, strengthening funding earmarking for specific territories as proposed by the Parliament should be balanced against the need for flexibility to respond to regions’ specific needs and various challenges, development paths, socio-economic profiles, and geographical features of each region.

– having regard to Regulation (EU) No 1300/2013 of the European Parliament and the council of 17 December 2013 on the Cohesion Fund and repealing Council Regulation (EC) No 1084/2006,

(Paragraph 82) The Commission takes note of the Parliament’s proposal on earmarking for territorial tools under the relevant funds. While it is too early to pre-empt future proposals for the post-2027 Multiannual Financial Framework, this will be assessed in the light of the positive experience in the EAFRD but also bearing in mind the recent crises, which demonstrated the need for higher flexibility and adaptability of the policies.

– having regard to Regulation (EU) No 1299/2013 of the European Parliament and the council of 17 December 2013 on specific provisions for the support from the European Regional Development Fund to the European territorial cooperation goal,

(Paragraph 84) The Commission takes note of the Parliament’s position in favour of a bottom-up approach in the selection of thematic priorities for the implementation of the funds. The Commission considers that the place-based approach, multi-level governance and the effective implementation of the partnership principle are key to identify the development challenges at local level and implement tailor-made solutions, while respecting the institutional framework of each Member State. The Commission recalls that the adjustments introduced in the Cohesion Policy 2021-2027 framework have already aimed at further balancing the place-based and thematic, sectoral approaches in line with the EU’s priorities by putting forward a smaller, focused list of key priorities, combined with a reinforced territorial approach and related instruments. This approach allows for a differentiation of thematic concentration requirements according to the level of development and flexibility in its implementation as thematic concentration requirements can be met at national level or at the level of category of regions.

– having regard to Regulation (EU) No 1304/2013 of the European Parliament and of the Council of 17 December 2013 on the European Social Fund and repealing Council Regulation (EC) No 1081/2006,

(Paragraph 86) While it is too early to pre-empt future proposals for the post-2027 Multiannual Financial Framework, the Commission recalls that the GDP is a key indicator in achieving the objective of economic, social, and territorial cohesion in Europe and reducing disparities between the levels of development of the various regions and the backwardness of the least favoured regions. At the same time, the Commission agrees that GDP alone cannot capture the social, environmental, and economic challenges faced by EU regions and recalls that the current cohesion allocation formula already includes several other indicators. The Commission also agrees that greater attention should be paid to the development dynamics and long-term trends of each region and that regions in a development trap receive tailor-made support, through a targeted set of investments and reforms, with a view to strengthen their resilience and make them more attractive.

– having regard to Regulation (EU) 2020/460 of the European Parliament and of the Council of 30 March 2020 amending Regulations (EU) No 1301/2013, (EU) No 1303/2013 and (EU) No 508/2014 as regards specific measures to mobilise investments in the healthcare systems of Member States and in other sectors of their economies in response to the COVID-19 outbreak (Coronavirus Response Investment Initiative),

(Paragraph 87) The Commission agrees with the Parliament that more attention should be paid to the disparities and challenges that can be concentrated at NUTS 3 level. The Commission recalls that this is the geographical approach applied to the Just Transition Fund and that lessons should be drawn from it in the future, including in the preparation of proposals on the future Multiannual Financial Framework.

– having regard to Regulation (EU) 2020/558 of the European Parliament and of the Council of 23 April 2020 amending Regulations (EU) No 1301/2013 and (EU) No 1303/2013 as regards specific measures to provide exceptional flexibility for the use of the European Structural and Investments Funds in response to the COVID-19 outbreak (Coronavirus Response Investment Initiative Plus),

The Commission points out that, in the context of a shared managed governance, Member States and regions have a margin of flexibility in determining the allocation and concentration of funds at geographical level, including at NUTS 3 level.

– having regard to Regulation (EU) 2022/562 of the European Parliament and of the Council of 6 April 2022 amending Regulations (EU) No 1303/2013 and (EU) No 223/2014 as regards Cohesion’s Action for Refugees in Europe (CARE),

(Paragraph 88) Cohesion policy is implemented in shared management with the Member States, where the responsibility for implementation lies with the programme authorities. To facilitate capacity building, planning and implementation of integrated territorial development, the Commission carries out a broad range of activities, including amongst others the Handbook on Sustainable Urban Development Strategies and the Handbook on Territorial and Local Development Strategies, which provide strategic planning and methodological support, information on how to use European Union funds and territorial instruments, and practical examples. To further improve access to information especially for rural actors, the Commission has also launched a Rural toolkit, an online guide to different European Union funding and support opportunities for rural areas. Moreover, the availability of technical assistance under cohesion policy programmes provides Member States with further possibilities to foster effective and efficient implementation of funds in line with their specific needs for expertise and administrative capacity support. Through the European Urban Initiative implemented in indirect management, the Commission offers dedicated support for the implementation of sustainable urban development covering cities of all sizes.

– having regard to Regulation (EU) 2022/2039 of the European Parliament and of the Council of 19 October 2022 amending Regulations (EU) No 1303/2013 and (EU) 2021/1060 as regards additional flexibility to address the consequences of the military aggression of the Russian Federation FAST (Flexible Assistance for Territories) – CARE,

(Paragraph 91) While Member States’ experiences of managing and implementing cohesion policy acquired over the years have had a positive impact on further enhancing the performance of the public administration, continued capacity building is necessary for effective investments and reforms and is supported in each Member State with dedicated technical assistance funding. Capacity building can also be supported as part of investments under all five cohesion policy objectives. Access to Member States’ technical assistance was simplified in the 2021-2027 regulatory framework, through the optional use of financing not linked to costs, and the definition of roadmaps for administrative capacity building, enabling better filling capacity gaps in fund management and delivery arrangements. Further support under cohesion policy includes tools for peer exchange and networking, self-assessment instruments, pilot actions, handbooks, studies, identification and dissemination of good practice, training sessions on key topics like public procurement, state aid and prevention of fraud/ corruption, planning and implementation of integrated territorial development, etc. These possibilities under cohesion policy programmes are complemented by other EU instruments such as the Recovery and Resilience Facility and the Technical Support Instrument. To strengthen the administrative capacity of local and regional authorities and support the necessary administrative reforms, the Commission considers that a more comprehensive approach to address weaknesses in regional and national administrations needs to be explored to further improve the management of funds.

– having regard to the Commission communication of 4 February 2022 on the 8th Cohesion Report: Cohesion in Europe towards 2050’ (COM(2022)0034),

(Paragraph 92) The Commission encourages the involvement of the cities and regional authorities for investments in sustainable development and has developed several platforms to enhance their capacity in the framework of cohesion policy, including under the Just Transition Platform of the Cohesion for Transitions community of practice.

– having regard to the Commission communication of 17 January 2023 entitled ‘Harnessing talent in Europe’s regions’ (COM(2023)0032),

(Paragraph 98) In the aftermath of the recent crises, cohesion policy intervened by allowing for further flexibilities, derogating from the agreed set of investments of the policy. These measures proved necessary to mitigate the economic and social costs of the crises; without such a quick adaptation of the policy, for instance to address immediate needs by the health sector, vulnerable households, SMEs, workers or refugees, the consequences, sometimes irreversible, would have been more severe and contributed to further widening of territorial disparities. Lessons need to be learnt for the future, embedding some flexibility in the programming and delivery mode, to strike a balance between the necessary reactivity to crises and the capacity to achieve the policy’s structural objectives and provide long-term investment stability.

– having regard to its resolution of 15 September 2022 on economic, social and territorial cohesion in the EU: the 8th Cohesion Report,

– having regard to its resolution of 15 February 2022 on challenges for urban areas in the post-COVID-19 era,

– having regard to its resolution of 20 May 2021 on reversing demographic trends in EU regions using cohesion policy instruments,

– having regard to its resolution of 25 March 2021 on cohesion policy and regional environment strategies in the fight against climate change,

– having regard to its resolution of 13 March 2018 on lagging regions in the EU,

– having regard to the opinion of the Committee of the Regions on the future of cohesion policy post-2027 of XXX,

– having regard to the EU Annual Report on the State of Regions and Cities 2022,

– having regard to Rule 54 of its Rules of Procedure, as well as to Article 1(1)(e) of, and Annex 3 to, the decision of the Conference of Presidents of 12 December 2002 on the procedure for granting authorisation to draw up own-initiative reports,

– having regard to the letter from the Committee on Agriculture and Rural Development,

– having regard to the report of the Committee on Regional Development (A90000/2023),

A. whereas the outcomes of the 2014-2020 programming period prove the indispensable role of cohesion policy as the only regional development instrument that is geared to local needs; whereas because of cohesion policy’s positive local impact, no other EU investment policy could replace it;

B. whereas despite the regulatory improvements introduced in the 2014-2020 programming period and the improvements in the 2021-2027 regulatory framework, a number of challenges remain;

Future cohesion policy

General principles

1. Insists that due to its regional focus, strategic planning and effective implementation model , cohesion policy should remain the EU’s main instrument for reducing disparities and stimulating regional growth and continue to be a key contributor to supporting recovery from symmetric and asymmetric shocks; calls for a clear demarcation between cohesion policy and other instruments in order to avoid overlaps and competition between EU instruments; believes that there must be an increase in the overall cohesion budget and in the MFF’s share of the policy compared to the 2021-2027 programming period;

2. Considers that cohesion investments should remain under shared management for programming and implementation in order to cater for local needs of regions, urban, rural and remote areas; acknowledges that co-programming, co-financing, coresponsibility and co-ownership are the most effective methods for successful implementation of any EU investment policy and any EU-financed project;

3. Underscores that the cohesion policy budget should not be used for new non-cohesion policy instruments and programmes, either within or outside the MFF; stresses that flexibility in the repurposing of cohesion funding should be a bottom-up driven process, initiated either by a Member State or by its regional or local level;

Local focus

4. Calls for disaster prevention and preparedness investments to be guaranteed either through a dedicated policy objective, thematic concentration or a specific enabling condition to ensure investments in local infrastructure and risk management in less developed urban and rural areas, including border regions; believes that targeted financing should focus on climate change adaptation and mitigation by tackling the side effects of climate change locally (slow onset events as well as extreme weather events), including wildfires, floods, landslides, heatwaves, coastal erosion and other events;

5. Calls for the creation of a technical assistance programme specifically designed for smaller municipalities and cross-border and rural areas that face new challenges such as the green transition and climate change; believes that the support should be in the form 100 % EU financing for administrative capacity-building, project design and strategic planning capabilities (including planning instruments), while the allocation criteria should include the number of inhabitants and the needs and challenges of these areas;

6. Calls for cohesion policy to include a stronger urban dimension through designated investments in urban areas as well as stronger links between urban and rural projects and investments; calls for the proportion of national ERDF allocations for urban development to be increased from 8 % to 12 %; calls for this funding to be co-programmed with local authorities and for their benefit; underlines in this context that administrative capacity is essential for ensuring that managing bodies and local authorities acquire technical knowledge on climate change which they can use for urban planning and urban management; is convinced that this will lead to better design and evaluation of project proposals, more effective allocation of resources and satisfactory budgetary implementation without significant risk of decommitments; acknowledges that integrated territorial investments have a fundamental role in quality implementation and absorption of resources;

7. Calls for the use of cohesion decommitments for thematic concentration on local infrastructure and for reserve margins within cohesion policy that will absorb future inflation or supply chain shocks; believes that the mechanism should operate on a rolling basis following the multiannual and annual decommitment cycles;

8. Calls for the reduction of thematic concentration requirements in order to allow for more flexibility to cater for local needs, following the principle of place-based policy in the EU’s territorial investments; underscores that thematic concentrations should be adapted to the way regions and cities operate in practical terms, from programming and reprogramming to implementation and closure; is certain that the key principle should be a tailor-made investment approach geared to specific needs on the ground;

9. Calls for initial allocations and co-financing rates to be assessed on the basis of NUTS 3 (nomenclature of territorial units for statistics) in order for funding to be directed to where it is most needed and to avoid pockets of underdevelopment from arising ; underlines that such a shift should take into account possible negative effects on EU financing for larger urban areas; stresses that this is necessary in order not to stall the development trajectory of metropolitan areas that were previously supported more intensively by cohesion policy;

10. Considers that for the allocation of funds for local projects, the focus should be on a smaller number of higher budget, common benefit projects, instead of scattering the limited resources across a high number of low budget projects; calls for guidance and planning support to avoid decommitments and repurposing;

11. Calls for the creation of local cohesion boards in the managing authorities and monitoring committees, which should have decision-making powers, including on co-programming and co-reprogramming with local authorities; reiterates that these boards should include representatives of urban and rural administrations, including mayors;

12. Is convinced that promoting an increased sense of local ownership in the long term, the durability of EU projects and higher co-financing leverage can be achieved through more fiscal decentralisation towards municipalities; acknowledges that such a path improves municipal borrowing capacity linked to financial instruments provided by the EU budget; underlines that local budgets need more fiscal space to compensate for inflation shocks and crises;

13. Calls for paths for the decentralisation of cohesion policy management to be explored in order to bring management closer to the local level; stresses that preparatory work should ensure that adequate capacity and institutional backing is available in order to ensure effectiveness, reduce the number of irregularities as well as no additional administrative burden for contractors and for final beneficiaries;

14. Encourages multi-city projects and collaboration agreements in order to harness pooled capacities and economies of scale in EU investments in infrastructure, climate change and the green transition; believes that this process should lead to a greater sense of ownership of projects and the consolidation of investments, instead of fragmentation and lack of synergies;

15. Calls for the further involvement of the EIB Group in cohesion policy investments, especially in less developed regions through the provision of support to sustainable cities, sustainable energy and local innovation projects; calls for the expansion of the local project assistance and financial instruments that complement and leverage EU grants;

16. Insists on a critical review of Commission’s ad hoc initiatives and the thorough screening of new initiatives; demands that this process is managed jointly and in partnership, with guaranteed representation of the local level, both of cities and rural areas; calls for limiting the number of Commission ad hoc initiatives, some of which prove to be of less use to the local level and might undermine the effectiveness overall cohesion appropriations planned in advance by scattering them; insists that every new Commission initiative must be accompanied by a corresponding budgetary top-up;

17. Calls for the creation of a mechanism for the early detection of red tape and actions in breach of or not effectively applying the multi-level governance principle; calls for the inclusion of the partnership principle in the European Semester; is convinced that the Commission and the ECA should have the right to follow-up, perform checks and make corrective recommendations;

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18. Instructs its President to forward this resolution to the Council, the Commission, the European Economic and Social Committee, the European Committee of the Regions, and the national and regional parliaments of the Member States.