EU Cohesion Policy 2014-2020

The cohesion policy (or regional policy) of the European Union provides a framework for financing a wide range of projects and investments with the aim of encouraging economic growth in EU member states and their regions. The policy is reviewed by the EU institutions once every seven years. The next round of programmes is to be launched in 2014.

The regional policy (also called ‘cohesion policy’) of the European Union has the overall goal of promoting economic prosperity and social cohesion throughout the entire territory of the Union, which means the 27 member states and their 271 regions.

Current programmes (2007-2013)

Within the current financial framework (2007-2013), spending on regional policy amounts to an average of almost €50 billion per year, which is more than one third (35.7%) of the total EU budget.

Regional policy spending is channelled through three funds – often called 'Structural Funds'. These are the European Regional Development Fund (ERDF), the European Social Fund (ESF) and the Cohesion Fund.

The three main objectives of the EU’s cohesion policy are: Convergence, Regional Competitiveness and Employment, and European Territorial Cooperation.

Convergence: Over 80% of the cohesion policy budget is allocated to the poorest regions, which are those where the GDP per capita is less than 75% of the EU average (or slightly above this level). This money is spent on measures to boost economic growth, including transport and other infrastructure projects. A total of 100 regions receive funding under the Convergence objective, which up until 2006 was known as ‘Objective 1’. These regions have a combined population of some 170 million people, which represents just over one third of the total population of the EU. Most of the so-called ‘Convergence regions’ are to be found in the 'new' member states in Central and Eastern Europe (which joined the EU since 2004) as well as in Greece, Portugal, Spain and southern Italy.

Regional Competitiveness and Employment: Around 16% of the money – or €8 billion per year – is shared among the approximately 170 regions that do not qualify for support under the Convergence objective. The ‘Regional Competitiveness and Employment’ objective was previously (until 2006) known as ‘Objective 2’. European money is used to co-finance projects that contribute to the strengthening of economic competitiveness by promoting innovation and entrepreneurship, protecting the environment, improving transport links, adapting the workforce and investing in human resources.

European Territorial Cooperation: The remaining 2.5% of the cohesion budget – around €1.25 billion per year – is used to promote cooperation among regions in different member states by means of joint projects and exchanges of experience. Most of this money is spent on building closer links between border regions.

Future programmes (2014-2020)

In November 2010, the European Commission published its first ideas concerning the future of the EU’s cohesion policy after the current programming period comes to an end in 2013.

The most significant ideas put forward by the Commission include the following:

Linking allocation of funds to the Europe 2020 objectives. These objectives include raising the employment rate, tackling poverty, improving access to education, investing more money in research and technology, using energy more efficiently and promoting clean technologies to reduce carbon dioxide emissions.

Inviting member states to sign partnership contracts.These contracts would closely correspond to the National Reform Programmes that the member states have to develop and implement in the framework of the Europe 2020 Strategy. They would set out priorities for investment, allocation of resources and targets to be achieved.

Focusing resources on a small number of priorities. The Commission is proposing that member states and regions should concentrate resources from the structural funds and national budgets on a small number of thematic priorities, linked to the Europe 2020 objectives. Those countries that receive a relatively small slice of the structural funds would be asked to focus their programmes on just 2 or 3 priorities.

Making payments depend on certain conditions. The Commission proposes to agree a series of specific conditions with each member state. These could relate to the implementation of improvements to public administration or reforms to national legislation - for example regarding employment rules or environmental standards. Final payments would not be made until the pre-agreed conditions have been met.

Creating a 'performance reserve' to reward the best performers. It has been suggested that relatively small part of the budget for cohesion policy (perhaps 3% of the total) could be kept in reserve and used for making bonus payments to those member states and regions that have been most successful in reaching and surpassing their pre-agreed targets.

Stronger monitoring and evaluation. The Commission believes that improved monitoring and evaluation systems are necessary for supporting the move to a more results-oriented approach. It would like clear and measurable targets and indicators to be agreed in advance, which can be used to assess the outcomes of programmes in the various member states.

Combining grants with loans. Using EU money to provide loans is seen as a way to maximise the impact of public money and encourage more financially sustainable investments. The Commission already has experience of utilising so-called ‘financial engineering instruments’ in the current programming period (2007-2013).

Reinforcing the territorial dimension. The Lisbon Treaty states that the European Union should promote not only economic and social cohesion but also territorial cohesion. This implies that the EU should aim to ensure a more balanced development of economic activity across all of its regions including urban and rural areas, islands and peripheral regions. In particular, the Commission intends to pay more attention to urban areas, and to increase the involvement of local and regional authorities in operational programmes.

Strengthening partnerships. The Commission wants to increase the involvement of local and regional stakeholders, social partners and civil society organisations in the implementation of operational programmes. It also wishes to encourage the spread of local development approaches based on partnerships among the various relevant actors.

The ideas put forward by the Commission provide the basis for a public consultation (open until 31 January 2011) and an ongoing dialogue with national, regional and local governments, the European Parliament, the Committee of the Regions, and other stakeholders.  EA