Cohesion, recovery funds clash causing headaches for regions

Critics are warning of significant delays in the EU's cohesion policy spending following the adoption of the bloc's long-term regional support plan, while stakeholders say more time is needed at the local level to devise spending strategies for recovery aid and structural support. [Shutterstock/esfera/By tunasalmon/okili77]

This article is part of our special report Cohesive recovery: where do structural funds fit in?.

Critics are warning of significant delays in the EU’s cohesion policy spending following the adoption of the bloc’s long-term regional support plan, while stakeholders say more time is needed at the local level to devise spending strategies for recovery aid and structural support.

“Investments without strategy are ineffective,” Cohesion and Reforms Commissioner Elisa Ferreira told European Parliament during the plenary to adopt the long-term regional support plan on Wednesday (23 June).

“Strategies and policies without the means to implement them are empty. And policies and investments without a territorial basis are blind. Cohesion policy offers the opportunity to bring together these three elements: the strategy, the means and the place-based method,” she added.

EU Parliament passes €330b regional package that fails on spending controls, say critics

The European Parliament adopted the EU’s long-term budget regional support plan at a plenary on Wednesday (23 June). Some EU lawmakers, however, were disappointed at the lack of support for cross-border projects and the lack of ability to monitor spending.

 

Ferreira called for implementation of the policy to start without delay, “working together, with the other instruments of support and recovery measures.”

“Lasting impact can only be achieved if all the policies and instruments work together in synergy for a stronger, resilient and more cohesive Union, where no one, no region, is left behind,” she said.

The Commissioner was alluding to the fact that the structural funds, which make up about a third of the normal long-term EU budget, will have to be implemented alongside the €672.5 billion Resillience and Recovery Facility (RRF) that will disburse €312.5 billion in grants alone by 2026, a sum comparable to the entire cohesion policy budget.

Meanwhile, the classical structural support instruments only need to be spent by 2029 leading to what critics fear will be a prioritisation of recovery fund spending and empty cohesion project pipelines.

Already some regions are warning that the parallel implementation of the cohesion policy programmes and recovery plans may lead to conflicts and overlaps, risks of double funding, additional administrative burden, or lack of strategic alignment between the funded investments.

Regions warn of bottleneck risks, double spending with EU recovery funds

Implementing the EU’s €750 billion recovery plan in addition to regular regional spending at European level is likely to prove a challenge, the bloc’s politicians admitted at an informal meeting of EU cohesion ministers in Lisbon on Tuesday (18 May).

MEP Corina Crețu, member of the European Parliament’s regional development committee and Commissioner Ferreira’s predecessor said that EU countries are facing three challenges.

There is a delay in spending the money from the previous budget, compounded by a late agreement on the new legislative package, complicated by the recovery.

“So we are in a way in a luxury situation, having a lot of money but not project pipelines supporting the needs of the people,” the former European Commissioner for regional policy said.

Regional fund spending slow despite Commission claims

EU countries have been much slower to spend structural funds aimed at reducing regional and social inequalities than in the previous seven-year budgetary period, figures from the European Commission show.

Member states had by the end of last year spent 56% …

“What I’m afraid is that many European countries have put cohesion funds on hold until they know whether their recovery plans will be accepted by the European Commission,” she added.

“I don’t think it’s a problem at all if we are slightly delayed on setting up the new programming period because for the moment […] we are in survival mode,” Normunds Popens, deputy director-general for implementation at the European Commission’s regional policy department told a recent EURACTIV event.

“It’s true that the RRF is coming in,” Popens admitted, pointing out that the EU executive sees the fund as helping to exit the pandemic-induced crisis in the next two to three years.

“So there I think we are looking at our programme as a more long term instrument which will stay there for another seven years,” Popens said.

“This is why taking a little bit of time this year, for me, it’s completely justified and actually very good, because we will arrive at quality programmes which will stay there and continue the work we are doing with REACT-EU and the RRF for the years to come,” he added.

The REACT-EU is also a €47.5 billion new fund. When the coronavirus first hit, the European Commission relaxed rules on cohesion funding to allow regions to draw on the €37 billion of unused EU cash.

The REACT-EU, financed from the money the EU executive is borrowing from the markets for the recovery, is supposed to bridge emergency measures and the classical cohesion policy. Other stakeholders point out that more thought needs to be put into where the money will go.

“There is a lot of potential in the recovery fund. There is a [also] lot of potential in the cohesion policy,” said Claire Roumet, the director of Energy Cities, the European association of local authorities in energy transition.

“What local and regional authorities would need now is just to stop, [and] be able to think exactly what would be their strategy,” she added.

Otherwise, Roumet warned, “we will never have good plans […] That is exactly what we need in terms of absorption rates, in terms of everything, we need to say stop. Now we just think.”

[Edited by Josie Le Blond]

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