The EU adopted yesterday new measures aimed at simplifying management rules for the structural and cohesion funds to help regions tackle the crisis. The changes should help to facilitate access to the funds and accelerate flows of investment at a time when public budgets are under pressure.
As part of the measures to counter the economic crisis, additional advance payments totalling 775 million will be paid out to some member countries to tackle immediate cash flow problems.
Johannes Hahn, EU Commissioner for Regional Policy stated that: “The crisis has dented business confidence, increased the number of people out of work, and is putting a massive strain on public finances. These measures should help to tackle liquidity problems, as well as reduce red-tape to make it easier to access funds. Speeding up project implementation on the ground will give a helping hand to national and regional economies in these times of crisis.”
László Andor, EU Commissioner for Employment, Social Affairs and Inclusion, responsible for the European Social Fund (ESF), added that: “The crisis has demonstrated the relevance and value of the ESF. The measures most resorted to in recent months have been active labour market policies to get people into work. Training and up skilling offered to people looking for work is bearing fruit and simplification will mean Member States can help those hit hardest by the downturn even more effectively.”
Through cohesion policy’s three funds – the European Regional Development Fund (ERDF), the European Social Fund (ESF) and the Cohesion Fund the 455 cohesion policy programmes are investing a total of 347 billion between 2007 and 2013 in all EU regions.
One major impact of the crisis is that Member States and regions are finding it difficult to provide the additional funding required ‘to match’ European investments. In response, the changes announced are intended to overcome this challenge to accelerate implementation of the programmes and simplify day-to-day management.
Key new measures include:
- Introducing a single ceiling of 50 million across the board for all types of major projects that require the Commission’s approval: the new uniform threshold will allow smaller-scale environmental projects to be approved by Member States alone, which will help them to start up more quickly.
- Allowing major projects to be financed by more than one programme: e.g. the construction of a major motorway section which cuts across different regions can now be co-financed by several regional programmes. Under previous rules, this could not be accommodated.
- Simpler procedure for revision of programmes to adapt more quickly to the current challenges
- Enhancing the use of financial engineering: possibility of setting up loan schemes to boost spending on energy efficiency and renewable energies in housing
- Easing the obligation to maintain investments: these rules will now only apply to projects where appropriate such as infrastructure and productive investment sectors. They will not apply to undertakings which go unintentionally bankrupt. For ESF-type operations this is also aligned with state aid rules.
- Simplifying the rules on ‘revenue-generating’ projects (e.g. toll motorways or projects involving the leasing or sale of land): in order to reduce the administrative burden on Member States, revenues will now only be monitored until the closure of the related programme.
- Targeting additional advances of 775 million (4% from the ESF and 2% from the Cohesion Fund) for Member States which received a loan under the IMF balance of payment scheme, or saw a GDP decrease of more than 10%: by applying these two criteria, this concerns Estonia, Latvia, Lithuania, Hungary and Romania.
- Postponing ‘N+2 decommitment’ rules: under N+2 if the funding allocated in 2007 has not been spent by the end of 2009 it would be automatically returned to the EU budget. The changes will allow the commitments for 2007 to be spent over a longer period. This will avoid the loss of around 220 million ( 125 million for Spain, 56 million for Italy, 9 million for the UK, 6 million for Germany, 4 million for the Netherlands and 20 million for cooperation projects between several countries)
These modifications complement the large number of other initiatives which have been taken since the beginning of the crisis under the European Economic Recovery Plan.
The Commission brought forward its proposal in July 2009 which was then discussed by the European Parliament and adopted by the Member States in the Council on 3 June 2010. The modifications enter into force on 25 June 2010.
