[Publication] Improving Essential Services in the EU regions: The role of Cohesion Policy

The study on “Improving Essential Services in the EU regions: The role of Cohesion Policy” analysed the role of EU instruments, and in particular Cohesion Policy, in supporting the quality of essential services in remote, rural and depopulated areas. A specific focus was placed on essential services tied to the provision of healthcare (including hospitals), childcare and services to people.

Demographic change will continue to shape Europe in the coming decades. Ageing and depopulation are pressing demographic trends, driven by declining fertility levels, mortality and migration. With life expectancy in the EU averaging around 81 years, the implications for social and economic systems are substantial. Population ageing and decline particularly affect rural and remote regions already facing economic stagnation. Out-migration and youth drain, spurred by the greater attractiveness of urban areas in terms of opportunities for education, employment and leisure, exacerbate these challenges. The resulting demographic imbalance contributes to low investment, labour shortages and declining living standards, posing significant challenges to regional development and vitality. Population decline and out-migration raise the costs of service provision, shrink the local tax base and deepen skill shortages. These patterns are expected to persist, potentially widening existing service deficits in remote and sparsely populated regions.

In this context, Cohesion Policy plays a central role in addressing the territorial and social disparities resulting from demographic change and depopulation. In the 2021-2027 programming period, the regulatory framework, most notably Regulation (EU) 2021/1058 on the European Regional Development Fund and on the Cohesion Fund, explicitly recognises the need to support rural areas and those with significant natural and demographic handicaps. This reflects the recognition of demographic challenges as a phenomenon having strong territorial implications.

The EU supports essential services in terms of healthcare, childcare and other services to individuals with Cohesion Policy, the Recovery and Resilience Facility (RRF) and the Common Agricultural Policy (CAP) in the Multiannual Financial Framework (MFF) 2021-2027. Both Cohesion Policy and the RRF have contributed substantially to maintaining and improving service provision. Cohesion Policy has dedicated around EUR 15.2 billion in EU funding (or EUR 22.6 billion in total planned expenditure) to support investments and service provision tied to healthcare, childcare and long-term care – with most support from the ERDF and ESF+. Of that amount, EUR 12.4 billion (or EUR 16.7 billion in total expenditure) are targeted at such investments in less developed and outermost or northern and sparsely populated regions. However, only Cohesion Policy uses territorial ring-fencing mechanisms that specifically direct support to disadvantaged regions, through higher co-financing rates for less-developed regions and specific flexibility and funding for outermost regions. While RRF funding also supports essential services, it is often not explicitly targeted at rural or remote regions.

However, this dependence raises concerns about financial sustainability of the supported investments. Beyond the initial infrastructure and equipment costs, operating and staffing tied to service provision require recurrent expenditure that may exceed local fiscal capacities once the project and associated EU funding ends. This risk highlights the need for long-term financial planning and national or regional mechanisms to secure the continued delivery of services initiated with EU funding.

The analysis of Cohesion Policy investments and interventions undertaken as part of this project highlights that Member States have applied specific and place-based interventions via Cohesion Policy to counterbalance the effects of demographic decline and outmigration on essential service provision in remote, sparsely populated and rural areas. The involvement of local and regional actors in the development and implementation of these interventions improves their relevance by linking them to local and regional needs and strategies.

The use of integrated and territorialised delivery modes, such as Integrated Territorial Investments (ITI) and Community-Led Local Development (CLLD), can improve coherence between investments in essential services and other regional interventions. By tailoring measures to local specificities and combining them within territorial strategies, such approaches can enhance regional vitality and attractiveness while strengthening the local implementation capacity.

In the context of the new MFF 2028-2034, a greater use of performance-based financing can reduce administrative burdens and increase efficiency and implementation speed. However, milestones and indicators must account for the particularities of remote, rural and sparsely populated regions, where low population density and geographic constraints make service delivery costlier. Targets based solely on population coverage risk discouraging investment in these areas and should be adapted to reflect regional realities.

Several recommendations are proposed to enhance the effectiveness of EU support for essential services in disadvantaged territories:

• Recommendation 1: Pre-allocation and higher funding intensities for rural, remote, sparsely populated and demographically declining regions
• Recommendation 2: Strengthen result-oriented monitoring for services to people, healthcare, childcare and other essential services
• Recommendation 3: Use Cohesion Policy to support a minimum catalogue of essential services
• Recommendation 4: Investments into essential services should be accompanied by investments into the broader economic fabric of the area to improve regional vitality and attractiveness
• Recommendation 5: Investments into physical assets in essential services should be complemented by adequate investments in training and recruiting qualified personnel, notably in healthcare, childcare and services to people
• Recommendation 6: Broaden the use of CLLD, ITI and other place-based instruments to improve the territorial relevance and coherence of investments in essential services with wider regional policies
• Recommendation 7: Mitigate accessibility gaps in essential service provision for rural and remote regions
• Recommendation 8: Strengthen the role of local and regional authorities in the programming and implementation of Cohesion Policy funding, including for essential services
• Recommendation 9: Promote long-term financial and institutional sustainability of essential services supported by Cohesion Policy
• Recommendation 10: Enable targeted technical assistance for regions facing demographic decline and out-migration
• Recommendation 11: Develop long-term strategic frameworks for demographic change accounting for the specific role essential services in healthcare, childcare and elderly care can play in maintain regional attractiveness and vitality
• Recommendation 12: Strengthen the role of regions in the National and Regional Partnership Plans, particularly in relation to the targeting of structural needs – including essential services – in remote and vulnerable regions
• Recommendation 13: Balance flexibility with long-term territorial development needs
• Recommendation 14: Maintain Cohesion Policy’s funding structure while exploring streamlining options