European Parliament : Report - Common provisions on the European Regional Development Fund, the European Social Fund Plus, the Cohesion Fund, and the European Maritime and Fisheries Fund and financial rules for those and for the Asylum and Migration Fund, the Internal Security Fund and the Border Management and Visa Instrument - A8-0043/2019 - Committee on Regional Development

On 29 May 2018, the Commission made its proposal for the Common Provisions Regulation (CPR) for the 2021-2027 period. The proposed CPR contains common rules for the European Regional Development Fund (ERDF), the Cohesion Fund (CF), the European Social Fund Plus (ESF+), the European Maritime and Fisheries Fund (EMFF), the Asylum and Migration Fund (AMIF), the Border Management and Visa Instrument (BMVI) and the Internal Security Fund (ISF). The Commission decided not to include rules on the European Agricultural Fund for Rural Development (EAFRD) in the proposal, contrary to what is the case for the 2014-2020 period.

A. Consideration of the proposal in Parliament

This proposal is of major political and practical importance, as it lays down the main rules for the Union's cohesion policy for the next seven-year period.

In view of the importance of the proposal, Parliament has authorised the Committee on Regional Development (REGI) to appoint two co-rapporteurs, namely Andrey Novakov (EPP) and Constanze Krehl (S&D).

A first presentation by the Commission and exchange of views took place in REGI on 20 June. After intense work over the summer, the co-rapporteurs submitted the draft report in September 2018.

In order to avoid any possible delay in implementation of the new cohesion policy and to allow interinstitutional negotiations to take place before the European elections and the renewal of Parliament in 2019, the co-rapporteurs have decided to deal with this proposal as speedily as possible. The deadline for tabling amendments in committee was 22 October 2018. The nine opinion-giving committees adopted their positions before the end of 2018, allowing the report to be adopted on 22 January 2019. Interinstitutional negotiations could then take place until mid-March 2019 so that the European parliament secures a first reading position by April 2019.

B. Key amendments proposed by the co-rapporteurs

The draft report built on the Commission Proposal, containing a number of amendments, listed and explained below which the co-rapporteurs would like to see taken into account in the final regulation.

1. Reintegration of the EAFRD

The Commission rightly notes that having a common rulebook for the different shared-management funds contributes to administrative simplification and coherence, and allows synergies between the different funds. The co-rapporteurs are therefore surprised that the EAFRD is not covered by the CPR, which could lead to strategic gaps and coordination issues for local investments. A number of the amendments above therefore seek to reintegrate the EAFRD into the CPR.

2. Resources for economic, social and territorial cohesion

The Commission's proposal provides for a smaller budget (EUR 330.6 billion) for cohesion policy compared to the previous seven-year period. Parliament decided, in its resolution of 30 May 2018 on the 2021-2027 multiannual financial framework and own resources, that the allocation for cohesion policy should remain, in real terms, at the same level as for 2014-2020. The co-rapporteurs have therefore tabled an amendment to increase the overall amount by around EUR 47.5 billion to a total of EUR 378.1 billion (2018 prices) in order to bring it up to the same level as during the 2014-2020 period. This increase is then implemented in the figures for the ERDF, CF and ESF+. The key for allocations between the Member States contained in Annex XXII is not touched, however. The allocations will merely need to be recalculated on the basis of the new total.

The co-rapporteurs propose that EUR 222.4 billion through the Investment for jobs and growth goal support the less developed regions, while EUR 46.3 are allocated to Member States supported by the Cohesion Fund.

3. Readjustment of the balance between the 'Investment for jobs and growth' goal and the 'European territorial cooperation' (Interreg) goal

The Commission proposal provides for 97.5% of the overall envelope to be spent on the jobs and growth goal, and only 2.5% on the Interreg goal. In view of the importance of the Interreg programme for cross-border cooperation and of its recognised EU added value, the co-rapporteurs propose to modify those percentages to 97% and 3%, which translates to EUR 366.7 billion and EUR 11.3 billion, respectively. This requires consequential modifications to the allocations to the different categories of regions, without modifying the respective proportions.

4. European Urban Initiative and transnational cooperation supporting innovative solutions

In view of the adjustment of the overall figures, in order to reinstate the level of funding available for the previous period, the co-rapporteurs propose to increase the fixed amounts of the allocation to the European Urban Initiative and transnational cooperation supporting innovative solutions by the same percentage: EUR 560 million and EUR 196 million, respectively.

5. Transfers out of cohesion policy to InvestEU and the Connecting Europe Facility

The Commission proposal allows Member States to transfer up to 5% of their cohesion policy allocation out in order to increase their allocations under InvestEU. Whilst the co-rapporteurs support the goals of InvestEU, they feel that cohesion policy is also very important for the development of Europe. The co-rapporteurs therefore wish to limit the transfer to 1% of ERDF, the ESF+, the Cohesion Fund and the EMFF before the mid-term review, and up to 2.5% under the mid-term review for investments in line with cohesion policy objectives and in the same category of regions targeted by the Funds of origin.

The Commission's proposal also provides for EUR 10 billion to be taken out of the Cohesion Fund in order to be spent on the Connecting Europe Facility. The co-rapporteurs propose to limit the transfer to EUR 4 billion. Whilst the Connecting Europe Facility is a worthy enterprise, it is not appropriate to further reduce the allocation for the Cohesion Fund. In addition to the limit, the co-rapporteurs propose that until 31 December 2023, project selection respects the national allocations under the Cohesion Fund.

6. Transfers between funds and between categories of regions

The Commission proposal allows Member States to transfer up to 5% of their allocations under a specific fund to a different fund. Whilst the co-rapporteurs understand the need for flexibility in some cases, they consider that allowing transfers between all funds could endanger the fulfilment of the core objectives of cohesion policy. They therefore propose allowing such transfers of up to 5% out of any fund, but only towards the ERDF, CF and ESF+, thus preventing the hollowing out of cohesion policy.

The Commission's proposal also allows for up to 15% of the allocation for less developed regions, which are to benefit from the largest share of cohesion policy funding, to be transferred to other categories of regions. Again, the co-rapporteurs agree that some flexibility is required. However, the reason less developed regions receive the largest share of cohesion policy funding is that they need it most. This draft report therefore proposes to limit such transfers to 5% at most.

7. Co-financing rates

The Commission proposal provides for maximum co-financing rates which differ according to the fund and the category of region (70% for the less developed, 55 for transition and 40% for more developed regions). The co-rapporteurs consider that there needs to be more leeway to provide higher rates of co-financing where appropriate. They therefore propose having co-financing rates of 85% for less developed regions, 65% for transition regions and 50% for more developed regions. In the case of funding paid out of the Cohesion Fund, for the outermost regions, or under Interreg programmes, they propose that the maximum co-financing rate should be 85%, as in 2014-2020.

8. Pre-financing rates

In the Commission proposal, pre-financing is to be paid on an annual basis at a flat rate of 0.5% each year. The co-rapporteurs consider that it is appropriate to gradually increase the pre-financing rate over the course of the multiannual framework to take into account the increasing level of implementation over that time. They therefore suggest increasing the pre-financing rate in steps each year, so as to reach 2% in the last two years of the programming period.

9. Links with the European Semester

The Commission proposes a strengthened link between cohesion policy and the European Semester process. This idea has been hotly disputed for some time. The co-rapporteurs consider that it is not appropriate to punish local communities for perceived failings of national economic policies. They therefore propose that serious failure to comply with recommendations linked to the European Semester process should only lead to the suspension of commitment appropriations and not payment appropriations. Even in serious cases, such suspensions should not be able to exceed a certain proportion of the funds to be spent in a Member State.

10. Mid-term review and programming

The Commission proposal provides for the mid-term review by the Member States of programmes supported by the ERDF, the ESF+ and the CF. The co-rapporteurs consider that this is a very important point in the framework of cohesion policy, as conditions necessarily change over the course of a seven-year programme. However, based on the experiences Europe has had over the last years, the co-rapporteurs consider that it is appropriate to indicate that economic crises are one of the key reasons which might warrant the reorientation of cohesion policy programmes. However, the outcome of the mid-term review should not lead to compulsory amendment of each programme. Therefore, the co-rapporteurs propose that Member States may state that no amendment is necessary.

In its proposal, the Commission asks the Member States to include in the content of their programmes the respective amount for the years 2021-2025 only. The co-rapporteurs propose indicative financial planning for the entire period 2021-2027, which is more favourable to managing authorities, beneficiaries and projects.

11. Decommitment rule

The European Commission proposed that the part of commitments still open on 31 December 2029 shall be decommitted. The co-rapporteurs decided to extend the decommitment rule to 31 December 2030 (n+3) in order to allow more time for the implementation of cohesion policy, and its programmes.

12. Major projects

In the 2014-2020 period, the CPR contains provisions putting in place special controls for major projects. Those provisions have not been included in the Commission's new proposal. The co-rapporteurs consider that some sort of special consideration is needed for major projects. They therefore proposed reintroducing a streamlined version of the current rules on major projects, albeit with a higher threshold.