[Publication] Streamlining EU Cohesion funds: addressing administrative burdens and redundancy

This paper provides a comprehensive review and assessment of the simplification measures implemented to reduce administrative burdens for Managing Authorities (MAs) and Intermediate Bodies (IBs), as well as beneficiaries in the use of European Structural and Investment Funds (ESIF). It outlines the various simplification initiatives introduced since 2007, with a particular emphasis on the 2021-2027 programming period, evaluates their effectiveness in addressing administrative challenges, and explores the ongoing debate on further simplifying Cohesion Policy (CP) beyond 2027. The study examines the landscape of EU funds and initiatives to analyse redundancies and consolidation possibilities. It concludes with recommendations on reducing administrative burdens and enhancing the effectiveness of fund implementation, suggesting potential fund mergers and strategies for both short-term and long-term improvements of CP.

Simplification initiatives

Over the three programming periods, the EU has introduced numerous simplification initiatives aimed at easing administrative burdens.

In the 2007-2013 period, simplification measures included:

• Extending eligibility periods for expenditure;
• Increasing flexibility in fund reallocation; and
• Implementing e-cohesion systems to reduce paperwork through electronic data exchange.

The 2014-2020 period:

• Introduced Simplified Cost Options (SCOs); and
• Introduced the single audit principle to prevent duplicate audits, and proportional controls based on project size and risk.

The current 2021-2027 period:

• Builds on the previous initiatives with further expansions of SCOs;
• Enhanced digital tools for e-cohesion;
• Broadened the harmonisation of rules across multiple funds;
• Increased flexibility in programme management; and
• Streamlined eligibility rules.

Administrative burdens and challenges

Despite efforts to simplify the implementation of the 2021-2027 programmes, MAs, IBs, and beneficiaries continue to face significant administrative burdens. These challenges stem from various factors, including delays in finalizing the legislative package and launching operational programmes, the simultaneous implementation of the Recovery and Resilience Facility (RRF), and the evolving and complex regulatory environment. Compliance with broader EU and national regulations, such as state aid and public procurement laws, further complicates matters. Additionally, the burden is intensified by complex audit and control requirements, high documentation demands, and inconsistent interpretations of regulations. While some simplifications, like the use of SCOs and e-cohesion systems, have helped alleviate certain burdens, new complexities have emerged, particularly with the integration of broader EU goals such as the European Green Deal and new horizontal principles. The persistence of gold-plating—adding extra national requirements—continues to inflate administrative costs.

The table below summarises the main causes and impacts of these administrative burdens and challenges faced by MAs, IBs, and beneficiaries.

Table 1:     Summary of key administrative burdens and challenges in ESIF implementation (2021-2027)

Source: own elaboration.

Consolidation of EU funds

Despite efforts to align the funds under a unified legal framework, the proliferation of instruments with overlapping objectives but different implementation rules pose challenges in terms of coordination, efficiency, and policy coherence. The introduction of the RRF and the Social Climate Fund (SCF) adds further complexity, with distinct implementation models and timelines that do not align with the traditional seven-year budget cycle of the Multiannual Financial Framework (MFF).

Reintegrating the European Agricultural Fund for Rural Development (EARDF) into the CPR is a logical step, as it often finances similar projects to those under the ERDF but in rural areas. Moreover, merging the Just Transition Fund (JTF) with other cohesion funds, such as the ERDF, would align programme priorities and eliminate redundant programming efforts. While integrating the SCF poses more challenges due to its funding mechanism and timeline, it shares core objectives with the ESIF, making future consolidation desirable.

Ultimately, these steps would streamline fund management and align them more closely with the EU’s cohesion policy goals, ensuring a more integrated approach to regional development.

Conclusions and recommendations

To enhance the effectiveness of proposed simplifications in the ESIF, several critical preliminary conditions must be met first:

• A broad political consensus on the need for genuine simplification and administrative improvements is essential, ensuring that these reforms are pursued consistently by all relevant EU institutions.
• The continuity of ESIF’s current shared management system must also be maintained, allowing new measures to build on the existing framework rather than disrupt it.
• Additionally, CP should not become a “catch-all” mechanism for new EU objectives beyond its core goals of promoting economic, social, and territorial cohesion pointed in Article 174 of the TFEU.
• A real commitment to partnership and evidence-based approaches is necessary, with all simplification proposals developed through open and continuous dialogue with stakeholders, including audit institutions.
• Furthermore, ensuring a stable legislative framework is vital, avoiding the delays and legal uncertainties experienced in previous programming periods.

Short-term recommendations:

• Focus on creating a comprehensive legislative package that consolidates existing funds and avoids the creation of new, ad hoc initiatives, thereby reducing complexity and administrative burdens.
• Including the European Agricultural Fund for Rural Development under the Common Provisions Regulation is suggested to facilitate multi-funded projects in rural areas.
• Modify audit and control procedures by strengthening the single audit principle, reducing duplication, and clearly distinguishing between unintentional errors and fraud.
• Expanding the use of SCOs and adopting best practices from centrally managed programmes, like HORIZON EUROPE, could further harmonise procedures and reduce administrative complexity.
• A more flexible approach to funding, combining results-based and cost-based models depending on project nature and objectives, should be considered.
• Additionally, abandoning a silo approach to ESIF and operational programmes could increase flexibility, enabling more comprehensive project implementation without needing to split actions into separate projects.

Long-term recommendations:

• It is recommended to move away from linking programming periods strictly to the seven-year financial perspectives and instead implement permanent programmes with built-in flexibility for periodic reviews and adjustments. This would provide greater regulatory stability, reduce the administrative burden associated with transitioning between programming periods, and allow for continuous project implementation. Long-term sectoral and regional strategies aligned with EU goals would guide these programmes, with periodic adjustments based on performance reviews or shifting priorities. This approach would enhance adaptability while maintaining regulatory coherence and reducing disruptions.
• Adopting a result-based financing model for ESIF, similar to the RRF. The RRF performance-based model, implemented without many of the constraints seen in ESIF (e.g., ex-ante conditionality, thematic concentration, and heavy audit requirements), has made ESIF less attractive to Member States and beneficiaries. If the model proves to be effective, it is recommended to apply it to ESIF. However, any transition must consider the shared management structure of CP, ensuring involvement from all stakeholders and the provision of clear, applicable rules by the Commission.

The paper demonstrates that for simplification efforts to be truly effective, broader actions beyond the current CP framework must be taken. There needs to be a strategic approach and clear principles in place to limit the creation of ad-hoc funds with separate implementation and financing rules, which complicate the achievement of CP goals. A more cohesive system is essential, ensuring that new initiatives align with existing structures rather than adding layers of complexity. Continued dialogue with stakeholders will be crucial in refining these strategies to ensure a more efficient and cohesive implementation of EU funds post-2027.

[1] Do no significant harm (DNSH) is a principle from the EU Taxonomy Regulation (EU 2020/852), ensuring that activities benefiting one environmental goal do not harm other environmental objectives, such as climate change mitigation, biodiversity, or pollution prevention. It applies to EU-funded projects to ensure compliance with sustainability criteria.