PART III - THE EU BUDGET AND THE CONTRIBUTION OF STRUCTURAL POLICIES
TO ECONOMIC AND SOCIAL COHESION
2 The contribution of structural policies to economic and social cohesion:
results and prospects
2.3 Outlook for the new programming period, 2000-2006
The new programming period opens up new challenges. It should be possible
to achieve renewed progress towards convergence and higher rates of growth
in the less prosperous parts of the Union because of a more favourable
outlook for the EU economy as a whole and a more efficient combination
of Member State and Community structural policies. This will not happen
to the fullest extent possible unless investment is allocated to priority
areas where the impact is greatest. Moreover, the effectiveness of intervention
is heavily dependent on respecting the implementation and management conditions
which have been jointly established with the Member States.
The two main conclusions to be drawn from model simulations of economic
developments over the new programming period are, first, that structural
policies can create the conditions for higher economic growth without
increased inflation and, second, that through this, they can increase
employment and, therefore, reduce structural unemployment (see
Box: Convergence, cohesion and growth: impact of CSFs in 2000-2006
Coherence of national and community priorities
Strategic guidelines1 for the 2000 to 2006
period have been adopted to achieve an optimal and more targeted use of
Community resources. Priorities and strategic objectives have been established
by the Member States after consultation with the Commission.
Ex-ante evaluations initiated by Member States helped, in most cases,
improve the coherence and quality of plans, notably by relating priorities
and objectives more closely to the analysis of social and economic problems.
The Commission, moreover, encouraged Member States to concentrate more
resources on priorities and high-impact measures, making Community intervention
more visible and efficient.
Under Objective 1, the Community guidelines imply a significant adaptation
of regional development strategies over the programming period.
Transport: towards a better balance
Transport is a major priority in the new programming period (accounting
for around 19% of the Structural Funds allocation - Table
A.36, in annex). The balance between different modes of transport
has been shifted towards rail from road. For example, under the CSF in
Portugal, the number of passengers travelling by rail is planned to increase
by 600,000 in 7 years (from 3.8 to 4.4 million a year), as well as the
metro link between Lisbon and the airport being completed. The plan envisages
a doubling of investment in rail in terms of Euros per head (from EUR
193.6 in 1996 to EUR 373 in 2006), while spending on road improvements
will remain unchanged.
Under the CSF in Greece, at least 650 km of double-track railway lines
are planned to be electrified in order to complete the trans-European
Network by 2006 and new metro lines will be constructed in Thessaloniki
and Athens, signalling a shift towards more environmentally friendly forms
of transport. In due course, 26% of journeys in Athens will be made by
In Objective 1 regions in Spain, new high-speed train routes are planned,
doubling the length of track from 623 km to 1140 km in 2006.
In Germany, very few infrastructure projects were financed in the previous
period, other than those aimed at supporting productive activity, such
as roads linking industrial sites or ports. Over the 2000 to 2006 period,
in contrast, investment of EUR 1.5 billion is planned for German Objective
1 regions, around a third on rail projects.
Upgrading road and motorway networks, nevertheless, remains a priority
in the cohesion countries, given their present state and the need to make
up deficiencies in respect of the trans-European networks.
The need to ensure sustainable development was already a priority during
the previous programming period, all infrastructure and transport projects
being subject to environmental assessment. The orientation of the CSF
for the present period makes clear that this will be continued, as reflected
in the choice of strategic objectives, such as limiting cross-city traffic,
the extension of public transport and the construction of high-speed rail
Reduction in direct support for firms
A marked reduction is planned in the share of transfers going to direct
support of firms, particularly in the cohesion countries and Italy, as
a result of stricter regulation of state aids and the recognition of the
significance of deadweight losses from these. Ireland is the most extreme
case, with the Structural Funds providing no direct aid to industry (except
for research and innovation programmes). In Italy, the national aid scheme
to support industry (Law 488) has been revised to tailor assistance better
to the specific sectoral and territorial features of firms in the Mezzogiorno.
Increased efforts to promote innovation and human capital
Total funds allocated to research, technological development and innovation
(RTDI) are planned to remain unchanged, at around 3.5% of total Structural
Funds expenditure, except in Italy and Ireland, where the shares have
risen to 8% and 10%, respectively. This, however, conceals a relative
decline in investment in infrastructure and research projects and a shift
towards a more open approach to innovation and collaboration between research
institutes and industry.
In the Member States where the RTDI shortfall is greatest, a shift in
the orientation of policy is most evident, in the form of:
- improved links between RTD and the needs of firms, through measures
to transfer innovation and technology; this could lead, for example,
to an increase in private RTD in Spain (to 45% of the total in 2006
as against 35% in 2000);
- an increase of employment in the RTD sectors, of 40% in Greece, and
to 0.5% of the total in Portugal and Objective 1 regions in Spain;
- increased involvement in international networks (a 50% increase in
scientific publications with Portuguese involvement, for example).
The Information Society: a strategic reorientation towards demand
Investment in telecommunications will be substantially reduced in the
new programming period, due to privatisation and competition between providers.
Most effort is aimed at services and applications in support of SMEs (e-commerce)
and the public sector (health and education), which represents a significant
change in regional policy. Accordingly, the Structural Funds are making
a major contribution to the development of an e-Europe. Support of telecommunication
infrastructure is generally limited to the most isolated areas, where
the return does not justify private investment. Member States have set
relatively ambitious targets under their CSFs, including:
- providing Internet access for schools (the proportion of schools
in Greece connected to the Internet increasing from 5% in 2000 to 100%
in 2006) and the population at large (the proportion connected in Spain
being planned to rise from 5% in 1998 to 25% in 2006);
- a wider spread of electronic commerce in SMEs (to 15% of SMEs in
Greece in 2006 from 1% in 2000).
Human resources: link to the European Employment Strategy
Investment in human resources plays a strategic role in Community policies
for economic and social cohesion, accounting for 30% of the Structural
Funds in the new programming period, the same as in the previous one.
The objectives are twofold: to help realise the human resource potential
of the Union and so contribute to economic development in Member States
and regions and to allow everyone equal access to the labour market. The
European Employment Strategy has encouraged policies on employment, the
labour market and the fight against social exclusion to be integrated
and the new programmes have a similar aim together with that of promoting
policy convergence across the EU.
Over the next 6 years, the ESF will provide around EUR 60 billion to
support the European Employment Strategy (EES), in addition to Member
States' own financing of labour market policies, a contribution of some
9% to total expenditure in this area. Other Structural Funds will also
play an important role in supporting the EES, but the ESF is the main
financial means at the EU level of pursuing the strategy.
The programmes for 2000 to 2006 reveal a strong link between the ESF
and the EES, most obviously in the greater focus on the preventive action,
in the form of support for those most at risk of becoming long-term unemployed.
In addition, future ESF programmes will have a firmer commitment to gender
equality, social inclusion and wider access to information and communication
technologies to combat what might be termed 'the digital divide'. In most
Member States, the ESF has been extended beyond a narrow focus on training
to wider support of measures designed to improve the effectiveness and
responsiveness of labour market policy. For some countries, the ESF 'policy
frame of reference'2 has also provided a useful basis
for securing a coherent approach to the various policies under the three
Objectives of the Structural Funds and to the various groups involved.
A preliminary review of the ESF support for Objectives 1 and 3 3
under the 4 pillars of the EES indicates that between 2000 and 2006:
- around 60% of funds will go towards improving the employability of
the work force, to co-financing active labour market policies and measures
to promote social inclusion and support lifelong learning. Objective
1 regions, in particular, will use ESF support to modernise their public
employment services to improve the functioning of labour markets;
- some 12% of funds will go to support the development of entrepreneurial
skills, helping business start-ups and establishing networks of entrepreneurs
to help maximise the benefits of support;
- around 20% of funds will go to supporting adaptability in the workplace,
much of it to promoting continuing training of the work force. There
will also be a sharper focus on the specific needs of SMEs than previously;
- around 6% of funds will go to supporting equal opportunities for
women, the fourth pillar of the EES, much of it to helping the development
of effective child-care measures. ESF support for equal opportunities,
however, will far exceed this figure.
Greater integration of environmental aspects
The environment is increasingly recognised as a key aspect of cohesion
policy. In line with the Amsterdam Treaty, the Commission guidelines emphasise
the importance of incorporating the concept of sustainable development
in the new structural programmes. The new regulation explicitly includes
a requirement to carry out an environmental evaluation, which includes
an environmental impact assessment, compliance with Community legislation
on the environment and the involvement of environmental authorities in
the preparation and implementation of programmes.
Member States and regions are becoming increasingly proactive in both
the conception and implementation of environmental aspects in regional
development programmes, including carrying out ex-ante evaluations of
the situation in eligible regions and of the impact of proposed measures
and establishing appropriate criteria for follow-up.
More generally, the Structural Funds seem increasingly to provide a favourable
means of implementing EU environmental policy. For example, respect of
the HABITAT directives, concerning the protection of natural sites, was
set as an essential condition for accepting plans and programmes.
Taking account of equal opportunities
Securing equality of opportunity between men and women has been given
new emphasis by its inclusion as one of the Community tasks set out in
the Treaty of Amsterdam. The regulations for the Structural Funds for
2000 to 2006 reflect this by stipulating that there should be a greater
consideration of equal opportunities in all policies and at all stages.
In the 1994 to 1999 period, equal opportunities were mostly addressed
through pilot projects or ring-fenced allocations for positive action
and, in general, they were viewed as an issue for the ESF alone.
The 1999 regulation explicitly requires ex-ante evaluation of this dimension
in all plans and Single Programming Documents (SPDs). While the appraisals
carried out by Member States were variable in quality, the fact that they
were carried out at all represents an important first step. The evaluations
undertaken in Finland, Germany and Wales are examples of good practice,
while Italy has developed an innovative approach to examining direct and
indirect benefits on men and women.
Contribution of EAGGF Guarantee to rural development policy
Twenty-seven different measures were co-financed by the EAGGF Guarantee
as part of its contribution to rural development policy. On the basis
of the programmes approved up to now by the Commission, the allocation
from this fund go, in the main, to measures which are directly linked
to the agricultural sector (see Table A.44, in
annex). Less than 7% of allocations go on measures for economic diversification
Improving efficiency and the evolution of instruments
The new regulations impose a programming system organised by Objective
as before, but in a simplified and more flexible form, with stricter controls
on additionality, more inclusive and responsible partnership and greater
focus upon results.
Simplified and decentralised programming
In the new programming period, negotiations have already taken place
and, in most cases, agreement reached on the CSF, SPDs and Operational
Programmes (OPs) for Objectives 1, 2 and 3, the guidelines have been adopted
and the Community Initiatives (INTERREG III, Urban II, Equal, Leader II)
and the new generation of innovative measures have been launched. 4
In line with the new rules, the number of programmes has been greatly
reduced, to around 400, from 1134 in the previous period (including 524
Community Initiatives). In the few cases - mainly in Spain - where programmes
were separated by Fund, the authorities established an integrated multi-fund
OP or SPD, allowing positive synergy between the measures envisaged.
Once the operational programmes have been approved by the Commission,
Member States will prepare complementary information, containing details
of the measures, while leaving scope for more flexible management without
infringing the regulations laid down, notably in terms of quantifiable
objectives and indicators for monitoring.
Additionality: a means of increasing effectiveness
Since 1989, the application of the additionality principle commits Member
States to maintaining at least the same level of public expenditure on
structural measures - excluding the EU contribution (Table
A.45). The principle was defined in 1993 and the 1999 reform simplified
the procedures for verification. There are, however, exceptions, such
as economic circumstances or exceptionally high expenditure in the past,
which allow Member State to reduce expenditure.
Additionality is assessed in respect of expenditure under each Objective.
For the 2000 to 2006 period, the procedure has been simplified in two
- for Objectives 2 and 3, additionality is jointly verified on the
basis of active market expenditure across each Member States as a whole;
- verification is carried out only three times, before adoption of
programmes (ex-ante), at the mid-point, and towards the end of the programming
Towards inclusive and responsible partnership
Partnership has progressively been widened in successive programming
periods, from the inclusion of regional and local authorities in 1989
to 1993, and of the social partners in 1994 to 1999, to the planned inclusion
of representatives from various groups (such as non-governmental organisation,
or the equal opportunities movement) in 2000 to 2006.
This widening reflects the efficiency gains achieved in the last two
programming periods (Table 21).
The preparation of the new CSF highlighted the increased awareness of
the roles of the various participants in the programming phase. In Italy,
the authorities set up a broad consultative framework, bringing together
local representatives (regional, provincial, communal), central Government
Ministers (for employment, agriculture, environment and equal opportunities)
and representatives from employers' organisations, trade unions and non-governmental
organisations. This led to the production of interim reports, which formed
the basis of the development plan for the Mezzogiorno. Such a broad structure
of partnership and the need to consult with all members can, however,
give rise to delays in the decision-making process.
In the 2000 to 2006 period, responsibility for management has been determined
according to the principles of decentralisation and subsidiarity. The
counterpart to this is the need to improve transparency, especially for
financial management, control of specific measures and project selection
procedures. It is important to establish new procedures for sharing information
to ensure that each participant can operate effectively and exercise their
- responsibilities need to be defined and divided between those involved
in the programming, those managing the measures and those paying for
- information networks need to be set up to collect and transmit data
- the responsibility of all those involved needs to be increased to
improve transparency of financial flows;
- scope for initiative needs to be widened to improve operational efficiency
and simplify procedures.
Partnership and decentralisation (the corollary of the former) are the
basic principles underlying a new approach to structural policy, which
is more in line with the need for a new form of governance, in place of
traditional management, to conceive and implement the programmes in question.
Management focusing on results
The new regulations emphasise the importance of monitoring and evaluation
to increase the effectiveness of structural policies.
The aim of the Commission and the Member States is to ensure effective
monitoring by defining quantitative objectives and appropriate indicators
in respect of approved programmes. The indicators are intended to measure
the impact of the programme, both directly (the infrastructure constructed,
the amount of training provided and so on) and indirectly (the gains in
efficiency, for example) as well as the wider economic and social effects
(such as on employment). 5 Electronic information
systems for the collection and processing of the relevant data are increasingly
being established in Member States.
The new regulations provide for financial management procedures which
are simpler, but more rigorous, with Member States taking primary responsibility
for controlling expenditure, a task they will need to perform more strictly
than before. In particular, a provision has been introduced for suspending
a project automatically if the funds allocated are not absorbed within
Regular and reliable evaluation of intervention can be regarded as evidence
of transparency and efficiency. Substantial progress has been made in
this regard, especially in Member States where there was not much of an
evaluation culture. On the one hand, the managing authorities have an
essential responsibility for organising intermediate evaluations and the
(proactive) use of the results. On the other, the Commission is responsible
for ex-post evaluations, identifying the results achieved and drawing
lessons for the future.
The introduction of the 'performance reserve' adds a new dimension to
evaluation by giving an incentive to achieve the objectives set beforehand
for each measure. Even though the Commission's more demanding proposal
was not accepted (to allocate 10% of funds to the reserve), Member States
will, nevertheless, have to assign 4% of total Community funds (around
EUR 5 billion) to programmes according to certain criteria, linked to
the efficiency of financial management and their effectiveness. In implementing
this provision, however, account will need to be taken of administrative
and institutional features of Member States.
The Commission has played an important role in establishing these new
arrangements, through discussions and by defining the methodological guidelines.
Though demanding and difficult to implement, a system of management by
results has become necessary to improve the transparency and effectiveness
- European Commission, The Structural Funds and their
coordination with the Cohesion Funds - Guidelines for the 2000-2006
programmes, COM (1999) 344 Final
- A document which sets out the context for support
for employment and human resources development in each member state
- At the time of drafting full details on Objective
2 programmes was not available
- The Commission has announced priorities for the four
Initiatives and has decided the allocation of the overall amount (EUR
10.44 billion or 5.3% of the total Structural Funds) between Member
- European Commission, Indicators for monitoring and
evaluation, Working Document n°3, 1999