Original publication: April 2016
Author: Diána Haase, Research Administrator
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1. Introduction

The Committee on Budgets (BUDG) of the European Parliament (EP) decided to draw up a strategic report on the preparation of the post-electoral revision of the MFF 2014-2020:  Parliament’s input ahead of the Commission’s proposal (Rapporteurs: Jan Olbrycht, Isabelle Thomas). In the Working Document(1) of the aforementioned BUDG procedure the Rapporteurs state that it is “in the Parliament’s interest to make the Commission aware in advance of the issues that it would like to see included therein.”

 

The Committee on Regional Development (REGI) decided to draw up an opinion (Rapporteur for the opinion: Constanze Krehl) for the report of BUDG. In January 2016 the Policy Department for Structural and Cohesion Policies was requested to provide internal expertise in support of the ongoing work of REGI on the aforementioned opinion. This briefing has been drawn up in response to this request.

2. MFF Review/revision, adjustment of cohesion policy envelopes

Article 2 of the regulation on the multiannual financial framework (hereinafter MFF Regulation)(2) states that the Commission is to present a review of the functioning of the MFF (taking full account of the economic situation at that time as well as the latest macroeconomic projections). The compulsory review shall be presented by the end of 2016 at the latest, and it might be accompanied by a legislative proposal.

The mid-term review is to allow for reassessing the priorities of the 7 year financial framework (2014-2020). The results of it are then to be taken into account in any revision of the MFF Regulation for the remaining years of the 7 year framework(3). It is also specified in the MFF Regulation that such revision shall not lead to reduction of preallocated national envelopes –
this being however without prejudice to the adjustment of cohesion policy envelopes under Article 7 of the same regulation (adjustment of cohesion policy envelopes as part of the technical adjustment for the year 2017).

Provisions for the adjustment of cohesion policy envelopes are set out in Article 7 of the MFF Regulation and Article 92(3) and 90(5) of the Common Provisions Regulation (CPR)(4). On the one hand, total allocations under the Investment for growth and jobs goal (i.e. European Regional Development Fund, European Social Fund and Cohesion Fund allocations, with allocations to European Territorial Cooperation goal not being subject to the exercise) are to be reviewed for the years 2017-2020. The calculation method is set out in Annex VII of the CPR (paragraphs 1 to 16). The total net effect of adjustments (i.e. the cumulated absolute value of necessary changes in allocations) is capped at EUR 4 billion. On the other hand, eligibility of Member States for support from the Cohesion Fund is also to be reviewed, and in the case eligibility comes to an end, support on a transitional and specific basis is to be provided.

In 2015, the Conference of Peripheral Maritime Regions of Europe (CPMR) carried out a simulation about the potential changes in eligibility (noting that the “highly complex nature of the process for reviewing structural funds allocations (…) makes it impossible for the CPMR to work out precisely the adjustments for each Member State”). Their analysis shows that it is likely that Greece, Spain and, to a lesser extent, Italy, Cyprus and the UK could benefit from the review, whereas Poland, in particular, but also Hungary and Romania would lose out(5).

Questions for further reflection (1)

3. Scope of the MFF Review/Revision – according to Commission sources

There are open questions as regards the scope of the mid-term review and the possible content of a legislative proposal. Some answers can be found in different Commission sources, the key document being the Commission’s Work Programme for 2016 (CWP 2016) that includes the following information (also relevant for cohesion policy) on the review:

Mid-term review of the MFF and Cohesion Policy

Annex I of CWP 2016 adds the following elements to the above: “The mid-term review of the MFF will address how better to target funding on the priorities the EU faces. The review will also look for ways to further orientate the EU budget towards results and simplify the applicable rules (REFIT) e.g. for the ESI Funds and the Common Agricultural Policy (CAP), and will explore the scope for further simplification under Horizon 2020 funding.”

The “Commission at work” website includes several roadmaps, including one with the title “Commission Communication and Proposal for a Council Regulation on the Mid-Term Review of the MFF 2014-2020(6). This document states that “the MFF review will be an important staging post on the road to the Commission’s proposal for the next Multiannual Financial Framework”(7). The Commission lists the following elements as relevant for the review process:

  • first evaluation of the Youth Employment Initiative (YEI);
  • first recommendations from the High Level Group of Independent Experts on Monitoring Simplification for Beneficiaries of the European Structural and Investment Funds (hereinafter High Level Group);
  • first outputs of the wider “Budget Focused on Results” strategy.

Reference is also made to the above mentioned adjustments of the cohesion policy envelopes under Article 7 of the MFF Regulation. Finally, it is explained that the MFF review, in addition to quantitative elements, will also include a qualitative assessment that could concern the functioning of new financial instruments(8), simplification measures or flexibility embodied in the MFF structure. The “main policy objectives” section outlined in this paper make it rather clear that even though the review is an opportunity to orient the EU budget further towards jobs, growth and competitiveness and to identify the room for manoeuvre towards new initiatives, policy options and their benefits and costs remain to be determined. This is echoed by a recent European Regional Policy Research Consortium (EoRPA) Paper underlining that the rationale of transfers across budget headings of the 2014-2020 MFF need to be carefully substantiated:

Mid-term review of the MFF and Cohesion Policy

The information distilled from Commission sources seems to indicate that the qualitative part of the MFF review is to touch upon issues of direct relevance for cohesion policy, these being simplification, implementation of the YEI, enhanced use of innovative financial instruments, measures related to result orientation as well as measures linking effectiveness of funds to sound economic governance.

As a parallel, but related process, the ongoing review of the Financial Regulation (FR)(9) should be monitored as well: the Commission’s roadmap on this process states that the review of the FR should be considered as part a simplification package and should be adopted together with the MFF Mid-term review foreseen in 2016. The roadmap document includes a list of key elements for simplification that could have an impact on the rules governing the ESI Funds.

Finally, during the debate on the MFF review in REGI (18 April 2016), the Commission representative highlighted that the review of the “top-up” measures and the special co-financing rates for Cyprus (Article 24(3) and Article 120(3) CPR respectively) might also play a role in the MFF review process (both actions are due 30 June 2016).

Mid-term review of the MFF and Cohesion Policy

(1) DT\1079911EN, PE572.902v01-00 of 30.11.2015.
(2) Council Regulation (Eu, Euratom) No 1311/2013 of 2 December 2013 laying down the multiannual financial framework for the years 2014-2020.
(3) MFF Regulation, Recital 2.
(4) Regulation (EU) No 1303/2013 of the European Parliament and of the Council of 17 December 2013 laying down common provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund, the European Agricultural Fund for Rural Development and the European Maritime and Fisheries Fund and laying down general provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund and the European Maritime and Fisheries Fund and repealing Council Regulation (EC) No 1083/2006.
(5) What do the recent regional GDP statistics tell us about Cohesion? Analysis from the CPMR Secretariat, July 2015.
(6) The date of the roadmap is December 2015. It was consulted on 26 January 2016.
(7) As for the procedural aspects, the coordination of the MFF review seems to be allocated to the Secretary General of the European Commission, but consultation with relevant DGs was started already in May 2015.
(8) It can be assumed that “financial instruments” are to be understood as defined in Article 2(p) of Regulation (EU, EURATOM) No 966/2012 of the European Parliament and of the Council of 25 October 2012 on the financial rules applicable to the general budget of the Union and repealing Council Regulation (EC, Euratom) No 1605/2002 (hereinafter Financial Regulation). This term can thus also refer to financial instruments in policy areas other than cohesion policy.
(9) Regulation the European Parliament and of the Council Regulation (EU, EURATOM) no 966/2012 of the European Parliament and of the Council of 25 October 2012 on the financial rules applicable to the general budget of the Union and repealing Council Regulation (EC, EURATOM) No 1605/2002.

Link to the full publication: http://bit.ly/573-430

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