Regions and cities worried about cohesion cuts, co-finance and ESF

Cohesion is the biggest loser from the EU's new budget proposal and regions and cities have expressed their concern. [Richard/Flickr]

EU regions and cities have expressed their concern about the European Commission’s new proposal for the post-2020 cohesion budget, raising doubts about the future effectiveness of the policy.

However, German states admitted that the cuts were painful but inevitable in the context of the new EU’s policy priorities.

The European Commission presented its much-awaited proposal for the Multiannual Financial Framework for the 2021-2027 period on Wednesday (2 May). According to the executive’s proposal, cohesion policy will be cut by approximately 7%.

The proposed level of cuts, the role of the European Social Fund, the co-financing rate and the budget that is moving from shared to direct management (mainly the Reform Support Programme) will now be the main topics of debate in the weeks ahead, before EU Regional Policy Commissioner Corina Cretu announces her legislative proposals for spending on 29 May.

Following the announcement, contacted a number of European Associations representing regions and cities for a comment on the effects of the new cuts.

CPMR: ‘not ambitious enough’

Eleni Marianou, Secretary General of the Conference of Peripheral Maritime Regions (CPMR), stressed that the European Commission had proposed an EU budget at the same level as the previous MFF, despite the financial impact of Brexit.

However, she noted that the proposals were not ambitious enough to address both traditional and new EU priorities at an appropriate level and added that the introduction of new own resources would enable the EU to go beyond the ‘juste retour’ approach.

“However, we are worried by the Commission’s proposed budget cuts to key policies impacting on regions, including the Cohesion policy and the European Maritime and Fisheries Fund (EMFF). We are concerned that the European Social Fund is presented as a standalone fund with its own budget line as opposed to being included under Cohesion policy,” she said.

CEMR: Letting down Europe’s towns and cities

Stefano Bonaccini, the President of Emilia Romagna (IT) and President of the Council of European Municipalities and Regions (CEMR), accused the Commission of letting down Europe’s towns and regions.

“Even on the basis of 2018 prices, this will represent a loss of €41 billion for local and regional governments for the 2021-2027 period,” he said.

On top of this, he explained, much more clarification is still needed regarding future programmes and issues such as co-financing.

“What does the Commission mean by saying it will increase national co-financing? Will all regions still be able to receive funding? What does the ‘rule of law’ clause mean for local and regional governments?” he wondered.

However, the Commission’s proposals also have a positive side.

“We are pleased that simplification and flexibility will be two pillars of the next cohesion policy, as towns and regions have long called for. Moreover, the Commission’s decision to include climate, digitalisation, transport or innovation as priorities is definitely a step forward. However, it still needs to say whether towns and regions will have direct access to this funding,” he concluded.

EUROCITIES: Cities essential for sustainable Europe

Daniël Termont, president of EUROCITIES and mayor of Ghent, insisted that cohesion policy should remain a strong pillar in the EU budget.

“It should reach all cities in the EU and empower them to act locally for a more inclusive, prosperous, democratic and sustainable Europe,” he commented, adding that European leaders should use it to build “a genuine partnership between the EU and its cities”.

German Länders: Cuts were painful but inevitable

On the other hand, the German Länders (federal states) are more supportive. They call, though, for improvements, support from the German government and reduce Brussels’ bureaucracy.

Minister of Finances of Brandenburg, Christian Görke commented, “The announced cuts in cohesion policy and its structural funds are most likely affecting the Eastern German regions. Unfortunately we have heard little about concrete financial structures for the future, which is of crucial importance for Brandenburg”.

“I, therefore, expect Chancellor Angela Merkel to show full commitment on the European stage to safeguard the support of the structural funds for regions with structural weaknesses in Eastern Germany. Everything else would mean slowing down progress on many levels, also in Brandenburg,” he said.

Along the same line, Minister of Finances and Europe of Saarland, Peter Strober, emphasised the need for a cohesion policy that is there “for all regions” as well as more money to be provided for research and education programmes like Erasmus.

“The fact that the EU intends to spend more money on defense and border control shows that it has been listening to its citizens and that it takes existing concerns seriously.”

President of Tuscany: Will European Social Fund be managed at the regional level?

The President of Tuscany Region, Enrico Rossi stated: “Today the Commission proposed a long-term budget of €1.135 billion in commitments over the period from 2021 to 2027, equivalent to 1.11% of the EU27's gross national income (GNI).

Although I appreciate that these figures are higher than those of the 2014-2020 period (1.087 billion in commitments equivalent to 1.03% of the GNI, I am very concerned about the significant cuts in the Common Agricultural Policy and Cohesion Policy headings. Furthermore, I am wondering if the European Social Fund+ could still be managed at the regional level since it will be part of the Human capital package together with other programmes, such as Erasmus.

I am very glad that the Commission introduced a "basket" of new Own Resources of around €22 billion corresponding to approximately 12% the EU budget's revenues.

These new resources include revenues from the Emissions Trading System, a call rate applied to the new Common Consolidated Corporate Tax Base and a national contribution on Non-recycled plastic packaging waste.

However, in the today’s proposal it is missing the introduction of a EU Financial Transaction Tax. This tax could contribute of the stabilization of the financial markets and drive up convergence reducing economic, social and territorial disparities across Europe.

EPC: Reduction in Cohesion Policy funding hardly fits to Juncker’s call

Robin Huguenot-Noël, Policy Analyst of EPC noted: "The suggested reduction in Cohesion Policy funding (more than the Common Agricultural Policy) hardly fits with Juncker’s call for a ‘modern budget for a Union that Protects, Empowers and Defends’. Cohesion Policy funds have served as the EU’s main ‘future investment’ policy in the current programming period by supporting infrastructure project, boosting skills development, and helping tackle youth unemployment in most vulnerable regions."

For Lower Saxony, Birgit Honé, the minister for regional and European affairs, Lower Saxony: The cuts the commission is planning on CAP and cohesion policy are very painful for Lower Saxony. There will need to be intense debates about this. Should cuts be unavoidable, then Lower Saxony sees itself in a better position to handle a lack of funds than other countries (Länder). "Over the years, we have become quite good at using EU funds more efficiently than some decades ago. [...] But we expect Brussels to significantly reduce the bureaucratic hurdles."

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