TABLE OF CONTENTS

Agriculture and rural development................................................................................................. 3

Citizens......................................................................................................................................... 7

Civil Protection............................................................................................................................. 9

Climate Action............................................................................................................................ 12

Competitiveness and SMEs......................................................................................................... 17

Customs Union and Taxation....................................................................................................... 21

Economic, Social and Territorial Cohesion................................................................................... 24

Education and Culture................................................................................................................. 28

Employment and Social Affairs.................................................................................................... 32

Environment................................................................................................................................ 37

External Action........................................................................................................................... 42

Fight against Fraud...................................................................................................................... 47

Health and Consumers................................................................................................................ 49

Home Affairs.............................................................................................................................. 52

Infrastructure – 'Connecting Europe' Facility................................................................................ 55

Innovative Financial Instruments.................................................................................................. 75

Justice........................................................................................................................................ 78

Maritime and Fisheries Policy...................................................................................................... 80

Research and Innovation............................................................................................................. 83

Administration............................................................................................................................. 87

Agriculture and Rural Development

1. Policy Objectives

Agriculture and forests cover the vast majority of our territory and play a key role in the health of rural economies and the rural landscape. Farmers perform many different functions ranging from the production of food and non-food agricultural products, to countryside management, nature conservation, and tourism.

The Common Agricultural Policy (CAP) is designed to deliver a modern, sustainable and efficient agricultural sector in Europe. It aims to promote the competitiveness of the sector, to ensure an adequate and secure food supply and to preserve the environment and countryside while providing a fair standard of living for the agricultural community.

The CAP is a genuinely European policy. Instead of operating 27 separate agriculture policies and budgets, Member States pool resources to operate a single European policy with a single European budget. This naturally means that the CAP accounts for a significant proportion of the EU budget. However, this approach is both more efficient and economical than an uncoordinated national approach.

Today, European agriculture faces a variety of challenges. In recent years, agriculture prices have risen by 50%, but energy and fertiliser prices have risen by 200% and 150%, respectively. The result has been a steep long-term decline in agricultural income. The sector must also respond to the challenges of climate change and environmental degradation and pressing concerns in relation to food security, territorial balance and the pursuit of sustainable growth.

Faced with these challenges, the CAP has evolved considerably in recent years. The forthcoming reform will continue this process and will result in a more modern, greener policy, equipped to contribute actively to the goals of the Europe 2020 strategy by unlocking economic potential in rural areas, developing local markets and jobs, accompanying the restructuring of agriculture and supporting farmers' income to maintain a sustainable agriculture sector throughout Europe.

The reformed CAP will promote smart, sustainable and inclusive growth by promoting resource efficiency in order to maintain the production base for food, feed and renewable energy across the whole EU; incentivising actions to mitigate and adapt to climate change, to protect ecosystems and fight biodiversity loss; and supporting diversification of economic activity in rural areas so as to promote balanced territorial development throughout Europe.

2. Instruments

The Commission proposes to maintain the current two pillar structure of the CAP:

· Pillar I will continue to provide direct support to farmers and to support market measures. Direct support and market measures are funded entirely by the EU budget, so as to ensure the application of a common policy throughout the single market and to allow for an integrated administration and control system.

· Pillar II of the CAP will continue to deliver specific environmental public goods, improve the competitiveness of the agriculture and forestry sectors and promote the diversification of economic activity and quality of life in rural areas. Member States have flexibility in the design of the measures, based on specific national and regional needs but reflecting EU priorities. Measures in Pillar II are co-financed by Member States, which helps to ensure that the underlying objectives are accomplished and reinforces the leverage effect of rural development policy. Through higher co-financing rates for the poorer regions of the EU, Pillar II also contributes to the cohesion objectives of the EU.

Within the two pillar structure, the design of the policy will be comprehensively modernised and simplified so as to deliver a fairer, greener policy, aligned with the Europe 2020 objectives.

The main elements of the reform will include:

· A more equitable distribution of direct income support

For historical reasons, the level of direct support for EU farmers per hectare differs substantially across the EU. For example, the average direct payment per hectare of potentially eligible land and per beneficiary for the year 2013 is €94.7 in Latvia and €457.5 in the Netherlands. The EU-27 average is €269.1.

The reformed CAP will include a system of 'convergence' to reduce these disparities and promote a fairer distribution of financial support. This rebalancing of support is a major element of the reform aimed at a more effective use of budgetary resources through more equitable and better targeted direct payments as well as a better fit between the future distribution of rural development support and the policy objectives. This will be achieved in the following way: all Member States with direct payments below 90% of the EU-27 average will, over the period, close one third of the gap between their current level and 90% of the EU average direct payments.

The allocation of aid for rural development will also be modernised, with shares determined on the basis of a series of objective territorial and economic criteria reflecting the future economic, social, environmental and territorial policy objectives.

· Greening of direct payments

The compulsory greening of direct payments is a fundamental pillar of the reform. It will enhance the environmental performance of the sector and illustrates clearly how the reformed CAP will contribute to a wider range of the Union's priorities.

Specifically, in future, 30% of direct payments will be made contingent on compliance with a range of environmentally-sound practices, going beyond cross-compliance.

· Support for active farmers

To ensure the efficient use of CAP resources, the benefit of direct support will be reserved to active farmers.

· Capping the level of direct payments for the largest farmers

At present, large agricultural holdings receive a disproportionate share of direct income support from the CAP. The reformed CAP will introduce a moderate and progressive process of 'capping' of the level of direct income support for the largest holdings, while taking due account of the economies of scale of larger structures and the direct employment these structures generate.

· A rural development policy focused on results

To maximise the synergies between rural development policy and the EU's other territorial development funds, the European Agricultural Fund for Rural Development (EAFRD) will be incorporated in the Partnership Contracts between the Commission and each Member State. These contracts will be linked to the objectives of the Europe 2020 strategy and the National Reform Programmes. They will set out an integrated strategy for territorial development supported by all of the relevant EU structural funds, including rural development. They will include objectives based on agreed indicators, strategic investments and a number of conditionalities.

· Simplified scheme for small farmers

Many of the beneficiaries of direct support are small farmers; a simplified allocation mechanism for their support will substantially reduce the administrative burden for Member States and farmers while being neutral for the EU budget.

· Market expenditure and crisis mechanisms

Today, European agriculture faces a variety of challenges, in particular the need to react to unforeseeable circumstances, which have a sudden impact on agricultural income, or the need to facilitate the adaptations/transitions required by international trade agreements.

For these reasons, it is proposed to restructure the market measures which are currently regrouped in Pillar 1, to create and extend two instruments outside the multi-annual financial framework. An emergency mechanism to react to crisis situations (which could result from a food safety problem or sudden markets developments) will be created to provide immediate support to farmers through a fast-track procedure. The procedure for mobilising this Fund will be the same as that for mobilising the Emergency Aid Reserve.

It is also proposed to extend the scope of interventions of the European Globalisation Fund to provide transitory support to farmers to facilitate their adaptation to a new market situation resulting from indirect effects of globalisation. Furthermore, the Commission proposes to transfer the funding of food support for the most deprived persons to Heading 1 in order to regroup actions to fight poverty and exclusion and to transfer the financing of food safety together with actions concerning public health.

3. Implementation

With the creation of the European Agricultural Guarantee Fund (EAGF) and European Agricultural Fund for Rural Development (EAFRD), the legislative basis of the CAP was restructured to align the two pillars of the CAP. In the post-2013 period, it is proposed to maintain the alignment of the two funds as far as possible.

The proposal for a new article of the Financial Regulation on shared management is in line with the current management and control systems applied for the EAGF and EAFRD.

A major streamlining of EU legislation on the organisation of agricultural markets has also been undertaken with the Single Common Market Organisation (CMO, Regulation (EC) No 1234/2007) bringing together into a single regulation the provisions formerly covered by the sectoral CMOs.

For the post-2013 period, a review of all legislative bases of the CAP is being conducted to ensure that simplification is continued wherever necessary and possible.

4. Budget Allocation

All figures in constant 2011 prices

Total proposed budget 2014-20 of which · Pillar I – direct payments and market expenditure · Pillar II – rural development · Food safety · Most deprived persons · Reserve for crisis in the agricultural sector · European Globalisation Fund · Research and innovation on food security, the bio-economy and sustainable agriculture (in the Common Strategic Framework for Research and Innovation) || €386.9 bn €281.8 bn €89.9 bn €2.2 bn €2.5 bn €3.5 bn Up to €2.5 bn €4.5 bn

Citizens

1. Policy Objectives

The Lisbon Treaty empowers citizens and citizens associations to participate fully in the democratic life of the EU.

The "Europe for Citizens" Programme supports transnational projects in the field of citizens' participation and European identity. While specific measures exist in various policy areas, the 'Europe for Citizens' programme is the only tool that enables citizens to engage on general European issues, whether institutional - for example, the EU Treaties or the European Parliament elections - or cross-cutting.

Communicating, i.e. informing the general public about EU policies is another way of strengthening citizens' awareness of European affairs and their rights. Communication activities therefore raise awareness of and provide support for the political priorities of the Union.

2. Instruments

The largest share of the Europe for Citizens programme supports transnational town twinning partnerships. The programme also provides structural support to EU level civil society umbrella organisations and think tanks. These strategic partnerships ensure that European public interest organisations can develop their input to EU-wide debates. This strengthens the ownership of the EU agenda among civil society and EU citizens and promotes a culture of civic participation to the benefit of the EU and Member States. The programme also contributes to developing a shared understanding of European history (specifically in relation to the Holocaust and Stalinism) by supporting remembrance projects.

· Since 2007, around 1 million European citizens per year have participated directly in actions supported by the programme.

· Between 2007 and 2010, there were around 800 civil society and remembrance projects, and over 4,000 town twinning projects.

· The programme also supports over 50 major EU level think tanks, umbrella organisations and networks, who are key interlocutors of the EU institutions and multipliers.

In addition to this specific programme, more efficiency in communication to the public at large and stronger synergies between the communication activities of the Commission are necessary to ensure that the Union's political priorities are communicated effectively. Therefore, a provision on communication, including corporate communication, will be included in each legal basis under the new generation of 2014-2020 legal instruments.

3. Implementation

The "Europe for Citizen" programme is centrally managed by the Commission assisted by the Education and Audiovisual Executive Agency (EACEA). They are supported by a Programme Committee composed of representatives of Member State governments. 'Europe for Citizens' Contact Points were established in the majority of the participating countries to assist beneficiaries at the national level and provide feedback to the European Commission on the implementation of the programme. Regular dialogue with stakeholders is organised in the framework of the programme.

Synergies and pooling of resources from the different legal bases for communication will ensure greater consistency, economies of scale and a better use of resources for communication actions addressed to the public at large.

4. Proposed Budget Allocation for 2014-2020

All figures in constant 2011 prices

Total proposed budget 2014-2020 || €203 million

Civil Protection

1. Policy Objectives

The overall objectives of EU cooperation in the field of civil protection are to ensure better protection of people, the environment, property and cultural heritage in the event of major natural, technological and man-made disasters.

The increase in the number and intensity of natural and man-made disasters and in their economic impact calls for systematic action at European level to strengthen preparedness and to enhance response capacities, both inside and outside the EU. European cooperation and solidarity enables the EU as a whole to be collectively prepared to face major disasters and allows Member States and other participating states (Norway, Liechtenstein, Iceland and Croatia) to pool resources and respond with a collective effort which maximises the impact of disaster response and minimises human and material loss. When disaster strikes within the EU or in third countries, the authorities of the affected country can benefit from immediate and tangible assistance through the EU Civil Protection Mechanism.

EU cooperation in the field of civil protection aims at:

– Facilitating a rapid and efficient response to disasters;

– Ensuring sufficient preparedness of civil protection actors to emergencies; and

– Developing measures for the prevention of disasters.

The EU has developed an integrated approach to disaster management addressing response, preparedness and prevention activities. A Communication "Towards a Stronger European Union Disaster Response" was adopted[1] by the Commission and endorsed by the Council in 2010. The main aim is to improve effectiveness, coherence and visibility of EU response. This will be done by building on lessons learnt from natural disasters occurring within Europe and outside the EU during 2010 (such as storm Xynthia, floods in Eastern Europe, forest fires in Southern Europe, the red sludge spill in Hungary, the Haiti earthquake, Pakistan floods).

The creation of the European Emergency Response Capacity will primarily build on existing Member State capacities, thereby avoiding additional costs. At the EU level, the establishment of the European Emergency Response Centre with strengthened planning and coordination functions will bring a gain for the whole EU by generating savings at Member State level which should outweigh the costs to the EU budget, although of course the benefits of fast and effective disaster response in terms of human lives saved cannot be measured in purely financial terms.

Prevention and Preparedness policy measures as set out in Commission Communications and Council Conclusions[2] include support for training and exercises, the exchange of experts and cooperation projects testing new approaches to reduce the risk of disasters. Independent studies for organisations including the World Bank have indicated that the return on investments in disaster prevention is between 400% and 700%.

2. Instruments

The Commission proposes to renew the Civil Protection Financial Instrument (CPI) to provide financial support for activities addressing the different aspects of the disaster management cycle, namely a more coherent and better integrated response in case of emergencies, improved preparedness to deal with disasters and innovative actions to reduce the risk of disaster. The CPI will also be used for the creation of the European Emergency Response Capacity, building on voluntary pooling of Member States civil protection assets, so as to generate enhanced cost-effectiveness through coordinated availability of civil protection assets.

The revised CPI will further strengthen and enhance the EU's disaster management capacity through a shift to predictable and pre-planned systems. This will be done by a more comprehensive collection of real-time information on disasters, an improved mapping of Member States' civil protection assets and a coordinated approach in facilitating the rapid deployment of staff and material to the disaster area. It will also support preparedness activities focusing on raising the quality of training, broadening the scope of training to include prevention and integrating training and exercises. It will also support Member States' efforts to reinforce risk management planning and to develop innovative financing mechanisms (such as regional insurance pooling).

3. Implementation

The renewal of the CPI will take into account the results of the evaluation and proposals of civil protection stakeholders on how to simplify procedures and funding mechanisms, as well as experience gained through pilot projects and preparatory actions on rapid response.

The civil protection activities implemented by the civil protection bodies of the Member States will be supported and supplemented by EU activities, including through the facilitation of co-ordinated action. This will take the form of activities such as the voluntary pooling of resources, training and supporting the cost of transport to deliver assets to places of emergencies.

This will facilitate the simplification of procedures used under the current instrument and will streamline administrative procedures, especially in the area of grants, taking into account the principles of transparency and equal treatment. The options being assessed relate to the type of operations to be supported – training, exercises related to emergencies, transport support for Member States in time of an emergency, cooperation projects on prevention and preparedness for disasters.

4. Proposed Budget Allocation for 2014-2020

All figures in constant 2011 prices

Total proposed budget 2014-2020 of the Civil protection Instrument of which || €455 million

Civil protection – internal || €245 million

Civil protection – external and European Emergency Response Capacity || €210 million

Climate Action

1. Policy Objectives

Tackling climate change is one of the great challenges facing the EU and its global partners. The need for urgent action is reflected clearly in the Europe 2020 Strategy and the EU's ambitious 20/20/20 targets, namely

– to cut greenhouse gases by 20% (30% if the conditions are right);

– to reduce energy consumption by 20% through increased energy efficiency; and

– to meet 20% of energy needs from renewable sources.

Building a low-carbon and climate-resilient economy will enhance Europe's competitiveness, create new, greener jobs, strengthen energy security and bring health benefits through cleaner air.

To achieve the climate and energy targets for 2020 and beyond, sustained effort and investment will be required. The EU has played a central role in monitoring and pursuing these targets. For example, efforts need to be significantly stepped up to reach the 20% energy efficiency target (with current estimates predicting that less than 10% will be achieved), which can lead to 25% reduction in greenhouse gas emissions. The Commission has mapped out the actions that could enable the EU to deliver greenhouse gas reductions of 80-95% by 2050.[3]

The EU budget has an important role to play in promoting climate action in all sectors of the European economy and in catalysing the specific investments that will be needed to meet the climate targets and to ensure climate resilience. These investments relate to a wide range of technologies that improve energy efficiency, to renewable energy sources and related infrastructures, and to investments for adaptation to climate change.

The cost of mitigation investments, estimated to be in the order of €125 billion per year[4], during the period 2014-2020 should be borne primarily by private investors, but the EU budget can act as a stimulus for national spending and offer long term predictability for private investors. The most promising areas include the renovation of buildings, innovation in transport and the deployment of new technologies, such as smart grids as well as renewable energy.

Such investments have huge potential to boost competitiveness and growth throughout the EU. The EU budget can bring particularly strong EU added-value by facilitating investments in Member States with high potential for cost-effective emissions reductions, but which have a relatively low capacity to invest. Investing in energy efficiency in all Member States will also increase overall productivity and contribute to resolving energy security and energy poverty issues. By supporting these investments, the EU budget can help to reduce significantly the overall cost of achieving the EU's climate and energy targets.

2. Instruments 2.1. Mainstreaming of climate action

Today, climate action is integrated into many policy areas and implemented through a range of instruments that support multiple EU objectives, for instance both biodiversity and climate change mitigation policies. Already today, a proportion of the EU budget is related to climate mainstreaming and thus contributes to Europe's transition to a low carbon and climate resilient society. The Commission intends to increase the proportion to at least 20%, with contribution from different policies, subject to impact assessment evidence.

In order to reach the Europe 2020 objectives, and to help other parts of the world to step up their efforts to combat climate change, the climate-related share of the future EU budget must be significantly increased, including investments in projects that are not exclusively climate-related but which have a significant climate component.

To achieve this aim, climate mitigation and adaptation actions will be mainstreamed into all the major EU programmes.

· Cohesion, energy and transport policies are highly climate-relevant. With respect to cohesion policy, a strong focus on results and strengthened conditionality will ensure that the projects supported by the EU budget contribute actively to the EU's climate objectives. The Partnership Contracts with Member States will be used to stimulate and monitor progress of investments contributing towards the 20/20/20 objectives. Mainstreaming should aim at "climate-proofing" of investments. Through its operational programmes throughout the EU, cohesion policy has a crucial role to play in stepping up efforts to reach the 20% energy efficiency target.

· Research and innovation: climate action will be a key pillar in the future Common Strategic Framework for Research and Innovation, which will support actions with a direct or indirect positive climate impact, in areas such as transport, energy, materials research and sustainable bio-economy. The Strategic Energy Technology Plan estimates the 2010-2020 needs at €50 billion for technology development to address climate change, to secure the EU's energy supply and ensure competitiveness. A substantial part of the budget should be invested via financial instruments (debt and equity) to address shortfalls in the market uptake of innovative low carbon and adaptation technologies.[5]

· The greening of direct payments to farmers will be one of the major elements of the reform of the Common Agricultural Policy (CAP). Beyond the existing cross-compliance requirements, 30% of the payments to farmers will be contingent on compliance with a number of sound environmental practices which will contribute to more climate-friendly agriculture. In this way, the reformed CAP will make an important contribution to the achievement of the EU's climate objectives, both on mitigation (e.g. increase soil organic matter, reduce emissions from the use of fertilizer and manure) and on adaptation (e.g. increasing resilience against pests, coping with lower water availability).

· In addition, rural development policy will increasingly be linked to climate action. Through the mainstreaming of climate and environment, strong incentives will be created for farmers to deliver EU public goods and improve the up-take of efficient technology for a greener and more climate-friendly and resilient agriculture sector.

2.2. LIFE + Programme

In addition to the mainstreaming of climate action and environment objectives, the Commission proposes to continue the LIFE+ programme and to align it more closely to the Europe 2020 objectives, including a larger share of climate actions. LIFE+ will continue to act as a platform for the exchange of best practice among Member States and as a catalyst for more effective investments. It will contribute to bottom-up climate action, both for developing capacity building projects at local/regional levels and for supporting private actors in testing small-scale low carbon and adaptation technologies, especially by SMEs.

Seed money is needed both for adaptation and mitigation pilot projects to ensure policy learning and further policy development for these new EU priorities. The Climate Action sub-programme will focus on pilot projects and small-scale demonstration projects. Integrated projects will also be used, for example, to promote cross border adaptation strategies in areas prone to flooding.

The Climate Action sub-programme will, in particular, support efforts contributing to the following objectives:

(1) Mitigation: Support for the reduction of greenhouse gas emissions. Actions for setting up pilot projects, which can be used to test innovative approaches including through support to SMEs, to improve the knowledge base and to facilitate the implementation of the climate acquis.

(2) Adaptation: Support to efforts leading to increased resilience to climate change. Actions to support the development or implementation of national/regional/local adaptation strategies. Actions enabling decision makers to effectively use knowledge and data about climate change impacts in particular for adaptation related planning.

(3) Governance and Awareness: support for efforts leading to increased awareness, communication, cooperation and dissemination on climate mitigation and adaptation actions. Actions for awareness-raising amongst EU citizens and stakeholders including on behaviour changes.

2.3. The global dimension

The Lisbon Treaty made combating climate change on an international level a specific EU objective. The EU, as the world's largest aid donor and a forerunner in market based mechanisms, has unique expertise to contribute. Financial contributions and participation in the governing bodies of the international instruments and funds will ensure the EU continues to be a major player in shaping future international climate policy. The EU is determined to deliver on its international climate finance commitments.

Climate policy will be mainstreamed and scaled up in the geographical external action instruments with the aim of significantly scaling up climate-related funding under the external action heading; regarding the thematic instruments of the DCI, the EU should aim to spend no less than 25% of the programme for "Global Public Goods" on climate change and environmental objectives. The EU budget will contribute to the international climate finance funding foreseen for developing countries by 2020 ($100 bn yearly) in the UNFCCC negotiations.

In addition to the mainstreaming of climate action into the external action budget, the Commission is considering the creation of a mechanism/fund outside the budget to pool together contributions from the Member States and the EU budget.

3. Implementation 3.1. Mainstreaming

Mainstreaming maximises synergies between climate policies and other areas but it must be visible and robust. It will be accompanied by a clear cross-cutting obligation to identify where programmes promote climate action or energy efficiency so that the EU is able to set out clearly how much of its spending relates to climate action.

It is proposed to establish clear benchmarks, monitoring and reporting rules for all relevant EU policy instruments. The framework should be simple and pragmatic and be built on two strands: 1) common tracking procedures for climate related expenditure; and 2) target setting in all relevant policies and the monitoring of results.

The tracking of climate-related expenditure will be integrated in the existing methodology for measuring performance used for EU programmes. All relevant instruments will include a specific objective related to climate, accompanied by a result indicator.

All expenditures will be marked in one of three categories: climate related only (100%); significantly climate related (40%); and not climate related (0%). This is based on an established OECD methodology ("Rio markers"), but does not exclude the use of more precise methodologies in policy areas where these are available.

Monitoring of delivery of results will ensure the effectiveness of the mainstreaming effort during the next budgetary cycle. This will also help to identify the effectiveness of different spending programmes and the conditionalities attached to them.

3.2. LIFE +

The current LIFE + programme is managed by the Commission in direct centralised management mode. The Commission considers that the future programme should remain centrally managed, but that management tasks could to a large extent be delegated to an existing executive agency. The conditions and terms of the delegation will have to take into account the need for the Commission to maintain strong policy links as regards Integrated Projects.

4. Proposed Budget Allocation for 2014-2020

Figures in constant 2011 prices. Excludes funds for mainstreaming which are included within the budgetary allocations for sectoral funding instruments.

LIFE + Programme (climate sub-programme) || €800 million

Competitiveness and SMEs

1. Policy Objectives

Promoting the competitiveness of EU industry - in particular small and medium-sized enterprises (SMEs) - and helping the adjustment of production and services processes to a low carbon, climate resilient, resource-efficient economy are key goals of the Europe 2020 Strategy. The EU is working to improve the business environment and to support the development of a strong and diversified industrial base capable of competing on a global scale.

Particular effort is needed to promote the development of SMEs. SMEs are a major source of economic growth and job creation in the EU, accounting for more than 67 % of private sector jobs and providing more than 58 % of total turnover in the EU. Creating the conditions for SMEs to flourish is part of the EU's growth and jobs strategy, as described in the Commission's Europe 2020 Industrial Policy flagship communication.[6]

The EU has an important role to play in unlocking the growth potential of SMEs, including through the targeted use of the EU budget. Activities in this area focus on addressing the key market failures that limit SME growth - for example in relation to access to finance – and ensuring that SMEs are able to take full advantage of the enormous potential of the European single market.

The strategic and innovative use of the EU budget will contribute significantly to these efforts. The EU budget will be used to help provide much-needed equity and debt finance via the use of innovative financial instruments and to support a wide range of activities to promote the development of SMEs at European level. Together, these activities will provide a significant boost to SMEs.

2. Instruments

The European strategy for industrial competitiveness and SMEs will focus on the promotion of SME-friendly activities across the full range of EU policies and spending programmes and on providing a dedicated support and services reflecting the particular needs of the SME community at European level.

2.1. Promoting industrial competitiveness and SMEs

It is essential that the specific interests and circumstances of SMEs are taken into account in the design of all EU policies and funding programmes.

In particular, the future financial framework will be designed so as to facilitate the participation of small businesses in funding programmes, for example by simplifying rules, reducing the costs of participation, accelerating award procedures and providing a "one-stop shop" to make life easier for the beneficiaries of EU funding.

2.2. A dedicated programme for industrial competitiveness and SMEs

In addition to the promotion of SME interests and the steps being taken to reinforce the coordination and simplification of funding programmes, the EU budget will also provide targeted financial support for SMEs. The Commission proposes to establish a dedicated "Competitiveness and SMEs Programme" as a successor to the non-innovation part of the current "Competitiveness and Innovation Framework Programme" (CIP). All research and innovation support to SMEs (including the innovation part of the CIP) will be included in the Common Strategic Framework for Research and Innovation. The "Competitiveness and SMEs Programme" will focus mainly on measures to promote more dynamic and internationally-competitive SMEs. These measures will include:

2.2.1. Access to finance: the financial instruments for growth

Financial instruments for growth will facilitate SME access to funding through the use of innovative financial instruments. These instruments will take full advantage of the new equity and debt platforms to provide both equity and loan guarantee facilities. Financial instruments, for start-up and growth investments, in particular venture capital, will also be provided in the Common Strategic Framework for Research and Innovation for innovative companies and SMEs. The instruments in the Competitiveness and SMEs programme will include:

(1) An equity facility for growth-phase investment, which will provide commercially-oriented reimbursable equity financing primarily in the form of venture capital (VC) through financial intermediaries to SMEs. Two measures are envisaged:

– Investments in VC funds which operate across borders within the EU and are focused on investing in growth-oriented enterprises, thereby supporting the development of an EU-wide VC market.

– A “fund-of-funds” (or “European fund”) investing across borders in VC funds which subsequently invest in enterprises, in particular in their international expansion phase.

(2) A loan facility, providing direct or other risk sharing arrangements with financial intermediaries to cover loans for SMEs. The facility would generate a high leverage effect and would provide the cross-border lending or multi-country lending that could not easily be achieved through facilities at national level.

In order to ensure complementarity, these activities will be closely coordinated with the types of action undertaken within cohesion policy under shared management.

2.2.2. Improving the competitiveness and sustainability of EU industry

This strand of the Competitiveness and SMEs programme will support actions including:

· Activities to improve European competitiveness: EU action in this area will focus on supporting coherence and consistency in implementation as well as informed policy making at European level. In particular, it will improve the economic and regulatory environment through benchmarking, the exchange of best practices and sectoral initiatives.

· Developing SME policy and promoting SME competitiveness in line with the goals of the Small Business Act (SBA). EU actions will include reinforcing the use of the 'Think Small First' principle in EU and Member State policy making, identifying and exchanging best practices in order to contribute to the implementation of the SBA, maintaining a single entry point to EU policies – the Small Business Portal and support to SMEs to exploit the potential of the single market.

· Tourism: EU tourism measures will focus, inter alia, on providing reliable information on trends in tourism demand at European level; developing competitiveness in the tourism industry and promoting ICT uptake by tourism enterprises; combating tourism seasonality; promoting sustainable tourism products and destinations; deploying a skills and competences framework for employees and employers in the sector; facilitating exchange of best practices and partnership creation. In line with the Lisbon Treaty provisions, EU tourism measures will encourage cooperation between the Member States by contributing to the diversification of the transnational tourism offer, coordinating national efforts towards enhancing Europe’s visibility in third markets and jointly promoting emerging, non-traditional European destinations.

· New business concepts for sustainable, user-driven design-based goods: This initiative will focus on the commercial use of relevant concepts and ideas in the textiles, footwear and sport and other consumer goods sectors.

2.2.3. Access to markets

These activities will include:

· Provision of growth-oriented business support services via the Enterprise Europe Network: As a one-stop-shop for SMEs, the Enterprise Europe Network with 600 partners organisations in 49 countries will continue to provide comprehensive and integrated services to SMEs which include:

– information and advisory services on EU matters;

– facilitation of cross-border partnerships by managing a cooperation database with 13,000 active requests and offers for cooperation;

– internationalisation services within the EU leading to 2,500 business cooperation, technology and R&D partnership agreements every year;

– informing SMEs on EU legislation and promotion of EU funding programmes, including the Common Strategic Framework for Research and Innovation;

– provision of a two-way channel for communication between SMEs and the Commission where 10,000 SMEs have been involved;

– support for improving the financial knowledge of SMEs; and

– access to energy efficiency, climate and environmental expertise by SMEs.

· SME business support in markets outside the EU: To access third country markets successfully, SMEs must be equipped with appropriate skills and knowledge of the third country regulatory framework. The proposed activities in this area include comparing the demand for services with current service delivery, the creation of an online portal and, where appropriate, in selected cases the establishment of and/or continuation of support to EU SME Centres, in cooperation with local European and Member State business organisations. The EU SME Centres will provide comprehensive support services for SMEs operating in markets outside the EU.

· International industrial cooperation: Activities will aim at reducing differences in regulatory and business environments between the EU and its main trading partners and the countries in the “European Neighbourhood” by government-to-government regulatory dialogue, business-to-business dialogues and “direct actions” with third countries such as thematic workshops and conferences.

2.2.4. Promotion of Entrepreneurship

Activities in this area will encompass the simplification of administrative procedures and the development of entrepreneurial skills and attitudes, especially among new entrepreneurs, young people and women. All activities will have a strong European dimension.

The Erasmus for Entrepreneurs exchange programme offers new or prospective entrepreneurs the possibility to work for up to six months with an experienced entrepreneur in another EU country. This European mobility scheme aims to promote entrepreneurship and to support the internationalisation and competitiveness of micro and small enterprises in the EU.

3. Implementation

The management of the new Competitiveness and SMEs Programme will be largely outsourced to external bodies, in particular the EIB Group for the "Financial Instruments for Growth" and the (successor of the) Executive Agency for Competitiveness and Innovation (EACI) for other activities related to SMEs.

4. Proposed Budget Allocation for 2014-2020

All figures in constant 2011 prices

Competitiveness and SMEs Programme || €2.4 bn

Customs Union and Taxation

1. Policy Objectives

One of the cornerstones of the internal market is the customs union. It enables a borderless internal market to function by ensuring that goods originating in third countries comply with agreed rules upon entry or release into circulation, and can thus move freely within the internal market. The customs union is also the operational arm of the common commercial policy, implementing bilateral and multilateral trade agreements, collecting duties, applying trade measures (such as rules of origin), embargoes and other restrictions.

In addition, customs increasingly has a protective function, such as contributing to the security of the supply chain, the fight against terrorism and international crime (e.g. money laundering, drug precursors and the illegal trade in weapons) and the enforcement of intellectual property rights at the border. It contributes to a level playing field by ensuring that imported goods comply with the same technical, health and safety standards as EU goods.

International trade is steadily expanding and efficient import and export processes are crucial for the competitiveness of the EU economy. At the same time, security and safety risks are growing. The EU therefore faces a double challenge which will shape its priorities for the future: to facilitate the flow of goods for legitimate traders while at the same time protecting citizens against risks to their safety and security.

National customs officials are responsible for the smooth functioning of the customs union on a day-to-day basis. This requires intense operational networking between customs administrations, including through cutting-edge IT infrastructure and systems that allow them to act as a single world-class customs administration. Funding certain actions through the EU budget instead of separate national programmes makes economic sense. That is why an EU-funded programme – the Customs cooperation programme – supports this networking and cooperation in a variety of practical ways.

EU businesses and citizens face a variety of tax-related obstacles when engaging in cross-border activities. Such obstacles result from fragmentation and divergence in the way that the same transactions are treated in different Member States. This is why the removal of these barriers and the pursuit of further tax co-ordination between the Member States – in full respect of Member State competences in this area – is one of the priorities for strengthening and deepening the single market.

Tax fraud has been and continues to be a serious challenge for the EU and the Member States, all the more so at a time when fiscal discipline is paramount. The fight against tax fraud within the single market is therefore high on the agenda of EU taxation policy. To combat fraud within the single market, strong administrative co-operation arrangements between Member State tax administrations and the efficient sharing of information on transactions, businesses or fraud schemes is necessary. For example, the fight against VAT and excise fraud is greatly facilitated by systems allowing for the rapid exchange of information between administrations.

The EU plays an indispensable role in assisting Member States in putting in place the necessary systems and processes for effective cross-border cooperation. In particular, the Fiscalis cooperation programme is pivotal in facilitating this cooperation, thereby adding value to the Member States' own efforts in this area.

2. Instruments

The Commission proposes a new generation of Customs ("Customs 2020") and Taxation ("Fiscalis 2020") programmes.

Both programmes will be instrumental in supporting and strengthening the internal market in the decade to come. The benefits will be enjoyed by all stakeholders through a more efficient and secure business environment, greater safety and security for citizens, and more efficient and effective implementation of public policy for governments.

These programmes will help the tax and customs administrations of the Member States to interact more efficiently, supported by modern and efficient information-exchange systems to facilitate legitimate trade while combating fraudulent activities. Such pan-European facilities can be provided most efficiently and economically at EU level. For example, the availability of a European-wide secure trans-European computer network interconnecting the customs and tax administrations generates annually a saving of €35 million for Member States, while costing only €11 million at the central EU level.

The programmes will support the following activities:

· Trans-European IT systems to share data and processes between national customs and taxation authorities through interoperable IT applications allowing administrations to cooperate and 'act as one' and further enhancing the e-administration for businesses and citizens;

· Reinforced human networks and competency building to stimulate practical cooperation, knowledge sharing, and the identification and dissemination of best practices and training between national customs officials, national tax officials, and trade representatives;

· Infrastructure capacity building to co-finance the purchase of specific operational equipment required for performing customs control and surveillance tasks at the EU's external borders, which is in the interest of all Member States.

3. Implementation

The Customs and Fiscalis programmes are implemented in a priority-based manner. Work programmes are established - together with the stakeholders - stipulating the priorities for a specific period. The legal bases of these programmes will be re-designed to move them from annual to multi-annual work programmes and to simplify current arrangements.

The direct central management mode currently in place will be retained and fully streamlined for both programmes in order to ensure maximum efficiency in terms of daily management support at Commission and national level and to allow for a better understanding of the implementing rules by all stakeholders.

Procurement contracts, accounting for the largest part of the programmes' budget, will mainly be executed by the Commission in accordance with EU rules and by using common quality assurance and acceptance rules.

Both programmes are designed so that the EU can react appropriately and quickly in fast-evolving situations. Having a tailor-made toolbox at the programmes' disposal as well as a flexible mechanism for the submission of proposals will enable the efficient implementation of programme activities.

There is a clear case for applying more alternative financing methods to cover participation and organisational costs. The Commission will replace (at least partially) the current application of actual costs with the payment of lump sums.

4. Proposed Budget Allocation for 2014-2020

All figures in constant 2011 prices

Total proposed budget 2014-2020 For Customs 2020 and Fiscalis 2020 || €690 million

Economic, Social and Territorial Cohesion

1. Policy Objectives

The primary objective of EU cohesion policy is to reduce the significant economic, social and territorial disparities that still exist between Europe's regions. Failure to act to reduce these disparities would undermine some of the cornerstones of the EU, including its single market and its currency, the euro.

Cohesion policy also has a key role to play in delivering the Europe 2020 objectives throughout the EU. Well-targeted cohesion spending can deliver real added-value, stimulating growth and creating jobs in Europe’s regions. In accordance with the conclusions of the 5th Cohesion Report[7], the Commission proposes to strengthen the focus on results and EU added-value by tying cohesion policy more systematically to the Europe 2020 objectives.

In particular, the Commission is proposing important changes to the way cohesion policy is designed and implemented. Funding will be concentrated on a smaller number of priorities, progress towards agreed objectives will be monitored more closely and strict conditionalities will be established in partnership contracts with the Member States. This will allow EU cohesion policy to make the greatest possible contribution to economic, social and territorial cohesion and the creation of growth and jobs.

2. Instruments 2.1. A common strategic framework

The Commission is proposing to bring the European Regional Development Fund, the European Social Fund and the Cohesion Fund together under a Common Strategic Framework, which will also cover the European Agricultural Fund for Rural Development and the European Maritime and Fisheries Fund. This will ensure greater coherence between the sources of funding and a much sharper focus on Europe 2020.

2.2. Increased concentration on Europe 2020

To increase the effectiveness of cohesion spending, funding in future will be targeted on a limited number of objectives linked to the priorities of Europe 2020.

Cohesion funding will continue to be concentrated on the less developed regions and Member States. However, in view of the difficulties experienced by Member States in absorbing structural funding and in raising the necessary co-financing, the cohesion allocation will be capped at 2.5% of GNI.

A new category of region – ‘transition regions’ – will be introduced to replace the current phasing-out and phasing-in system. This category will include all regions with a GDP per capita between 75% and 90% of the EU27 average, and more in particular:

· Regions currently eligible under the convergence objective but whose GDP per capita has grown to more than 75% of the EU27 average. As a safety net, these regions will keep two thirds of their current allocation; and

· Regions which – although currently not eligible under the convergence objective – have a GDP per capita between 75% and 90% of the EU27 average. The level of support will vary according to the level of GDP, so that regions with GDP close to 90% of the EU average will receive an aid intensity similar to that of the more developed regions.

Competitiveness regions with GDP above 90% of the EU average will continue to receive support from cohesion policy for a limited number of priorities.

Transition regions and competitiveness regions would be required to focus the entire allocation of cohesion funding (except for the ESF) primarily on energy efficiency and renewable energy; SME competitiveness and innovation. In these regions, investments in energy efficiency and renewable energy will be at least 20%. Convergence regions will be able to devote their allocation to a wider range of objectives reflecting their broader range of development needs.

Finally, territorial cooperation will continue to play its role in helping regions overcome the disadvantages of their location on internal or external borders, in contributing to an ambitious neighbourhood policy and addressing shared cross-border and transnational challenges.

The cohesion instruments will be used to pursue distinct but complementary objectives:

· European Regional Development Fund

The ERDF aims to strengthen economic and social cohesion in the European Union by correcting imbalances between its regions. The ERDF supports regional and local development by co-financing investments in R&D and innovation; climate change and environment; business support to SMEs; services of general economic interests; telecommunication, energy and transport infrastructures; health, education and social infrastructures; and sustainable urban development.

Contrary to the current period, all these types of investment will in future be able to be financed not only by grants but also by financial instruments (risk capital risk funds, local development funds, etc.).

· European Social Fund

The European Social Fund aims to strengthen economic and social cohesion by supporting employment promotion; investment in skills, education and life-long learning; social inclusion and the fight against poverty; and enhancing institutional capacity and efficient public administration.

Minimum shares for the European Social Fund will be established for each category of regions (25% for convergence regions; 40% for transition; and 52% for competiveness regions) and the scope of the European Social Fund will be extended to cover the cost of equipment linked to investments in social and human capital.

· Cohesion Fund

The Cohesion Fund helps Member States whose GNI per inhabitant is less than 90% of the EU27 average in making investments in TEN-T transport networks and the environment. Part of the Cohesion Fund allocation (€10 billion) will be ring-fenced to finance core transport networks under the "Connecting Europe" facility (see also separate fiche). The Cohesion Fund can also support projects related to energy, as long as they clearly present a benefit to the environment, for example by promoting energy efficiency and the use of renewable energy.

3. Implementation 3.1. Shared management

The support provided through cohesion policy will continue to be subject to shared management by the European Commission and the Member States (except for the Connecting Europe Facility which will be centrally managed), which will be required to provide co-financing. Countries receiving financial assistance in accordance of Article 136 or 143 TFEU will have the possibility of benefitting from a higher rate of co-financing.

3.2. Partnership Contracts

Partnership Contracts between the Commission and each Member State will set out the commitments of partners at national and regional level and the Commission. They will be linked to the objectives of the Europe 2020 strategy and the National Reform Programmes. They will set out an integrated strategy for territorial development supported by all of the relevant EU structural funds and include objectives based on agreed indicators, strategic investments and a number of conditionalities. They will contain commitments to give yearly account of progress in the annual reports on cohesion policy and in other public reporting.

3.3. Integrated programming

Member States will in the future be encouraged to use multi-fund programmes with common processes for preparation, negotiation, management and implementation, in particular where the need for improved coordination of human capital and infrastructure investments is greatest.

Where appropriate, a "lead fund" will be established, linked to the policy domain(s) of the programme. The lead fund's interventions would be complemented by interventions from the other structural funds so to ensure coherent support for the different thematic objectives under cohesion policy.

3.4. Conditionality

New conditionality provisions will be introduced to ensure that EU funding is focussed on results and creates strong incentives for Member States to ensure the effective delivery of Europe 2020 objectives and targets through Cohesion policy. And to ensure that the effectiveness of cohesion expenditure is not undermined by unsound macro-fiscal policies, conditionality linked to the new economic governance will complement the sector specific ex ante conditionalities set out in each contract.

Conditionality will take the form both of 'ex ante' conditions that must be in place before funds are disbursed and 'ex post' conditions that will make the release of additional funds contingent on the achievement of pre-specified results. To facilitate this, clear milestones and indicators will be specified and progress monitored rigorously through annual reporting. Lack of progress will give rise to the suspension or cancellation of funding,

3.5. Performance reserve

In order to strengthen the focus on results and the achievement of the Europe 2020 objectives, 5% of the cohesion budget will be set aside and allocated, during a mid-term review, to the Member States and regions whose programmes have met their milestones in relation to the achievement of the programme's objectives related to Europe 2020 targets and objectives. The milestones will be defined in accordance with the regulations for cohesion policy.

3.6. Innovative financing

In addition to grant funding, it is proposed that cohesion support for enterprises and projects expected to generate substantial financial returns will be delivered primarily through innovative financial instruments. (See also separate fiche on innovative financial instruments)

4. Proposed Budget Allocation for 2014-2020

All figures in constant 2011 prices

Total proposed budget 2014-2020 Of which || €376 bn

· Convergence regions · Transition regions · Competitiveness regions · Territorial cooperation · Cohesion fund · Extra allocation for outermost and sparsely populated regions || €162.6 bn €39 bn €53.1 bn €11.7 bn €68.7 bn €926 million

· Connecting Europe Facility for transport, energy and ICT || €40 bn plus €10 bn ring fenced inside the Cohesion Fund

Education and Culture

1. Policy Objectives

Education and training are essential to the development and growth of the European economy and will play a crucial role in the collective pursuit of the Europe 2020 targets. Increased investment in human capital and the modernisation of education and training systems will help the EU to become a smart, sustainable and inclusive economy.

Much of this investment will be made at national level. However, with increasing numbers of European citizens looking beyond national borders for education and training opportunities, the EU has an important role to play in ensuring that the opportunities of the single market are made available to all.

The EU works to promote education and training in a wide variety of ways. Programmes to promote transnational learning mobility - such as the Erasmus programme - have proven to be a great success, helping people to acquire the new skills that will be needed for the jobs of tomorrow. Increased mobility can also contribute to the reform of education and training systems by facilitating the cross-border dissemination of ideas and best practices. Through a combination of targeted funding programmes and in combination with other sources of funding, such as the structural funds, the EU budget can deliver real value-added by promoting mobility, facilitating cooperation and exchange of best practice and supporting Member States in the modernisation of their education and training systems.

Europe's cultural diversity is one of our greatest strengths, enriching and inspiring citizens and delivering real economic benefits. The economic and social role of the cultural and creative industries is increasingly evident, representing 4.5% of total European GDP in 2008 and accounting for some 3.8% of the workforce. The EU works in close co-operation with Member States in this area to harness the potential of the single market and to provide the right conditions for cultural and creative industries to prosper.

The next generation of programmes funded by the EU budget will address the weaknesses that limit the growth potential of this sector, by tackling market fragmentation, strengthening competitiveness in the cultural and audiovisual sectors, and focusing on capacity building measures and support for the circulation of cultural works.

2. Instruments

The Commission proposes that the EU budget will support education and cultural policy via two main instruments:

2.1. A programme for education, training and youth - 'Education Europe'

This programme will bring together the currently separate sub-programmes of the Lifelong Learning Programme, the international aspects of Higher Education, including Erasmus Mundus, and Youth in Action. This will allow for greater efficiency, a stronger strategic focus and for synergies to be exploited between the various aspects of the programme.

Although they constitute the most efficient education degrees for innovative jobs and research, the current EU instruments for mobility are not adapted to masters' students. The most cost efficient manner to reach this category of students is to use the EU budget to leverage funds from the private sector, mainly national banks, to guarantee the portability of student loans and grants.

The actions currently supported by the Leonardo programme will be boosted as part of efforts to combat youth unemployment and the Commission will work with the EIB to provide guarantees for loans to Master students wishing to do their Masters in another Member State.

The new programme will focus on:

– providing targeted transnational learning opportunities;

– matching skills and labour market demand in order to boost the employability, entrepreneurial spirit and participation of young people;

– volunteering as well as non-formal and informal learning; and

– supporting widespread reforms and the modernisation of education and training systems throughout Europe and beyond.

Concretely, the programme will comprise three main lines of action:

(1) Trans-national learning mobility - as many as 800,000 EU citizens, mainly students, could be helped to be mobile each year.

(2) Co-operation activities between education institutions and the world of work will be supported to promote the modernisation of education, innovation and entrepreneurship.

(3) Policy support will be provided to gather evidence on the effectiveness of education investments and to help Member States implement effective policies.

Strict quality conditions for mobility, concentration on key policy objectives where critical mass can be achieved and complementarity with other EU programmes will be instrumental in ensuring very high European added value.

The Education Europe programme will incorporate existing international programmes such as Erasmus Mundus, Tempus, Alfa and Edulink and cooperation programmes with industrialised countries under the same instrument, and will accommodate different objectives (attractiveness of European Higher Education Area, excellence, solidarity and equity).

This approach will put an end to the current fragmentation of EU instruments supporting international cooperation in higher education which makes it difficult for students and universities to get access to information on Europe's higher education opportunities and for EU higher education to be visible on the global scene.

2.2. Sport

As part of the Education Europe programme, the proposed Sport sub-programme will focus on:

· tackling transnational threats that are specific to sport such as doping, violence, racism and intolerance, or issues relating to the integrity of competitions and sportspersons;

· developing European cooperation in sport through, for example, guidelines for dual careers of athletes or benchmarks for good governance of sporting organisations; and

· supporting grassroots sports organisations which can play a role in addressing wider socioeconomic challenges such as social inclusion.

This programme will bring EU added-value to issues arising from the specific nature of sport, mobilising private-sector financing from actors in the field of sport, and supporting organisations at the base of the sporting pyramid - not the top professional level.

2.3. A programme for culture and the audiovisual industry - 'Creative Europe'

This programme will bring together the current Culture, MEDIA and MEDIA Mundus programmes in order to focus support on the achievement of the Europe 2020 goals and to help unlock the job creation potential of the cultural and creative sectors. The programme will complement other EU programmes by specifically targeting the needs of the cultural and creative sectors aiming to operate beyond national borders, and with a strong link to the promotion of cultural and linguistic diversity. The specificities of each sector will be catered for, including through a dedicated budgetary allocation, and a third strand will provide horizontal support to the creative and cultural industries through the use of innovative financial instruments.

3. Implementation

Implementation of the new programmes will be greatly simplified.

The new Education Europe programme will bring about a significant simplification of actions and rules through the elimination of sub-programmes, a reduction in the overall number of activities and an increased use of lump sums.

The Creative Europe programme will be managed centrally through the Education Audiovisual and Communication Executive Agency (EACEA), as is currently the case for both Culture and MEDIA. A small number of actions will be managed directly by the Commission (e.g. European Capitals of Culture, EU cultural prizes, joint actions with international institutions).

The Culture and MEDIA strands of the Creative Europe programme will be complemented by an innovative financial instrument, run by the EIB group, to provide debt and equity finance for cultural and creative industries (CCI). This will address one of the key barriers to the development of cultural and creative content - access to finance - and would reach cultural and creative industries that are not supported through other EU programmes.

4. Proposed Budget Allocation for 2014-2020

All figures in constant 2011 prices

Total proposed budget 2014-2020 of which || €16.8 bn

· Education Europe || €15.2 bn

· Creative Europe || €1.6 bn

Employment and Social Affairs

1. Policy Objectives

The European Union faces considerable challenges in the employment and social fields. Almost 23 million people are today unemployed and over 113 million are estimated to be living at risk of poverty or exclusion[8]. Social and employment issues are a primary concern of European citizens and an area where more is expected from the Union. Despite a recent improvement in the economic outlook, employment prospects remain mixed in the medium term, among other things due to the uneven situation among Member States and the expected pressures on economic restructuring coming from the global economy.

Unemployment and persistently high rates of poverty call for comprehensive action. Policies that have already been put in place need to be updated and strengthened as the Union is faced with pressing challenges: shortfalls in skill levels, under-performance in active labour market policy and education systems, social exclusion of marginalised groups and low labour mobility. Many of these challenges have been exacerbated by the financial and economic crisis, demographic and migratory trends and the fast pace of technological change. Unless tackled effectively, they constitute a significant threat to social cohesion and competitiveness.

The main responsibility for modernising labour market and social policy systems lies with the Member States. However, the EU adds value to their efforts by acting as a catalyst to promote and facilitate reform, providing funding notably through the European Social Fund and by empowering social partners, civil society organisations and other stakeholders who have a crucial role to play in the delivery of reform.

2. Instruments

A European employment and social inclusion initiative will be set up through joint action in the fields of education and vocational training, employment and inclusion. Funding in this area will be delivered essentially through three main instruments. These will be fully aligned with the Europe 2020 objectives and their delivery improved through enhanced complementarity with other instruments and the simplification of relevant procedures.

2.1. The European Social Fund

The European Social Fund (ESF) will provide funding for structural actions for economic, social and territorial cohesion. Funding will be concentrated on the key priorities of the Europe 2020 strategy, in particular through four 'investment windows':

– employment promotion;

– investment in skills, education and life-long learning;

– social inclusion and the fight against poverty; and

– enhancing institutional capacity and efficient public administration.

Within these windows, the ESF will also contribute to other policy objectives, such as facilitating the transition to a low-carbon and resource efficient economy, promoting research and innovation, especially in the social area, strengthening gender equality and combating discrimination. It is proposed to regroup actions, in particular in favour of social inclusion, by transferring the scheme of food support for the most deprived persons to the ESF.

For the post-2013 period, the ESF will be covered by the Common Strategic Framework (CSF) for structural funds[9]. Funding will be programmed as part of the Partnership Contracts which will be negotiated with the Member States. The targets set will be aligned with the National Reform Programmes and will translate the agreed objectives into decisions on investment.

To strengthen the focus on results, a conditionality mechanism, based on a comprehensive set of ex-ante defined requirements, will be put in place to maximise the impact of the EU budget and trigger and support the necessary reforms in the Member States.

In order for the ESF to make a real contribution to the Europe 2020 strategy targets, a critical mass of funding is required both at EU level and at the level of the operational programmes. The necessary minimum share of cohesion policy investments allocated to the ESF will be tailored to the different categories of region reflecting the different intensities of aid they receive and challenges that they face: this will be done by establishing minimum shares for the ESF of the structural funds support for each category of region (25% for convergence regions, 40% for transition regions, 52% for competitiveness regions, based on the Cohesion Fund continuing to represent one third of the cohesion policy allocation in eligible Member States, and excluding territorial co-operation). The application of these shares result in a minimum overall share for the ESF of 25% of the budget allocated to cohesion policy.

2.2. An integrated programme for employment, social policy and inclusion

The integrated programme for employment, social policy and inclusion will contribute to the delivery of the Europe 2020 strategy and its mutually reinforcing headline targets through support for actions to promote a high level of employment and adequate social protection, combat social exclusion and poverty and improve working conditions. The programme will act as a catalyst for change in the Member States and consist of the following elements:

· A Europe-wide platform for mutual-learning processes to enhance the evidence base for reform design and implementation and promoting stakeholder involvement in policy-making to strengthen ownership of EU employment, social policy and inclusion objectives, building on the successful experience with the Progress Programme;

· Promoting evidence-based social innovation to boost the Member States' efforts to modernise national social and employment policy systems through the use of proven methods for designing, implementing and evaluating innovation and more effective dissemination of information;

· Promoting intra-EU labour mobility and improving access to employment opportunities, in particular for young people, building on the activities of the EURES network;

· Supporting entrepreneurship and self-employment as a means of creating jobs and combating social exclusion by increasing the availability and accessibility of micro-finance for vulnerable groups, micro-enterprises and the social economy, building on the Progress Micro-finance Facility.

2.3. European Globalisation Adjustment Fund

Specific support to workers made redundant as a result of major structural change will be provided through the European Globalisation Adjustment Fund (EGF).

Through the EGF, the EU will continue to assist the Member States in providing tailor-made support for workers made redundant as a result of major structural changes triggered by the increasing globalisation of production and trade patterns. In addition, the EGF will address large-scale redundancies resulting from a serious disruption of the local, regional or national economy caused by a sudden and unexpected crisis. The EGF will aim to achieve a 50% rate of assisted workers finding a new and stable job after 12 months[10].

The Commission will propose to extend the scope of the EGF to provide compensation in certain cases for the consequences of globalisation on certain agricultural sectors.

2.4. Autonomous budget lines

In addition to these instruments and by virtue of the powers conferred on it by the Treaty, the Commission will continue to implement autonomous budget lines[11] in order to:

– facilitate the European social dialogue which is a crucial component of the European social model;

– analyse and evaluate major trends in national legislation on free movement of persons and promote coordination of national social security systems; and

– analyse the social situation and the impact of demographic change.

3. Implementation

The reduction in the number of financial instruments and budget lines and the streamlining of management and implementation methods and systems will allow for greater integration between instruments and bring considerable simplification, notably for the beneficiaries.

3.1. The European Social Fund

The implementation of the ESF will focus on combining a stronger results-based approach, through the incorporation of the ESF within the Common Strategic Framework for all shared management instruments and the Partnership Contracts negotiated with Member States.

Implementation will also be simplified. More use will be made of simplified cost options, in particular for small projects, thereby reducing the administrative burden on Member States and regions and facilitating access to funding for local initiatives. Closer linkage of payments to achievement of targets pre-defined in the Partnership Contracts will also be enabled on the basis of joint action plans.

Finally, result-based incentive mechanisms will be introduced to reward successful programmes and measures and stimulate changes in those that under-perform.

3.2. An integrated programme (direct management) for employment, social policy and inclusion

The new integrated programme for employment and social inclusion will be directly managed by the Commission. The main procedures include calls for tender, calls for proposals and joint management – in particular for implementing the microfinance facility in collaboration with the European Investment Fund. The new programme will focus on large projects with clear EU added value in order to reach critical mass and reduce administrative burden. Harmonised and simplified rules and procedures will be put in place to facilitate access to the programme, in particular for small organisations.

In addition, multi-annual programming will be put in place to set out long-term policy objectives together with annual funding, thereby ensuring that the programme is a genuine policy-driven instrument. The programme will be implemented through a results-based management approach based on regular monitoring of progress against clear indicators.

3.3. Support for workers made redundant

The mobilisation of the EGF will continue to require a decision of the budgetary authority. The Commission will seek to ensure that the operation of the EGF becomes simpler and more responsive to changing economic circumstances.

3.4. Autonomous budget lines

The implementation of the autonomous budget lines will be fully coordinated with both instruments to avoid overlap and to increase synergies. Their number will be reduced and larger projects will be given priority in order to achieve critical mass and reduce administrative burden.

4. Proposed Budget Allocation for 2014-2020

All figures in constant 2011 prices

Total proposed budget 2014-2020 of which || €88.3 bn

· European Social Fund (based on the 25/40/52 formula per category of regions, resulting in 25% of the cohesion envelope, except the Connecting Europe Facility) || €84 bn

· Integrated Policy for Employment, Social Policy and Inclusion || €850 million

· European Globalisation Adjustment Fund || €3 bn

· Autonomous Budget Lines || €400 million

Environment

1. Policy Objectives

The European Union's environmental policy contributes to the Europe 2020 objectives of smart, sustainable and inclusive growth. Investments in environmental protection are investments in the modernisation of our societies and will help to transform Europe into a knowledge-based, resource-efficient economy. They are indispensable for protecting and improving the quality of the environment.

Greening the economy entails reducing environmental costs through the more efficient use of resources, thereby contributing to growth, competitiveness and job creation. Protecting biodiversity - our natural capital - and strengthening the resilience of ecosystems will make an important contribution to our sustainable growth objectives. Ecosystems provide food, fresh water, raw materials and many other benefits, thereby contributing to productivity and quality of life and reducing public health bills. The restoration of ecosystems and the services they provide contribute to the green economy through new skills, jobs and business opportunities, by boosting innovation and by contributing to climate change challenges mitigation and adaptation.

The value added of working together at European level to achieve common environmental goals is widely recognised, since environmental issues are not confined within national borders. Working closely with the EU's neighbours and with emerging economies is a prerequisite for a greener Europe. Environmental sustainability is also one of the Millennium Development Goals, to which the EU is committed.

In addition to the benefits of European environmental legislation, the EU budget can contribute to environmental objectives, both through dedicated programmes and by ensuring that environmental objectives are firmly embedded in all the activities supported by the EU budget.

2. Instruments 2.1. Mainstreaming

Environmental policy priorities will be 'mainstreamed' into all the major EU funding instruments, including cohesion, agriculture, maritime and fisheries, research and innovation, as well as into external aid programmes. This approach will maximise synergies between environmental policies and other areas, recognising that the same actions can and should pursue a variety of complementary objectives. This approach will also help to avoid a proliferation of programmes and to minimise administrative burden.

· Agriculture. A major objective of the reform of the Common Agricultural Policy (CAP) is to promote environmental objectives through the greening of direct payments to farmers. 30% of direct payments will be made conditional on respect for a range of environmental best practices, over and above existing cross-compliance obligations. In addition, rural development under the CAP will be further re-focused on delivering public goods, including through agri-environment measures. These measures will help to ensure that the EU agricultural sector is sustainable and a key provider of environmental public goods such as clean water, biodiversity, soil protection, cleaner air and landscape protection. This will also contribute to the achievement of the EU's climate objectives, both on mitigation and adaptation.

· Maritime and Fisheries Policy. Environmental sustainability will be at the heart of the future maritime and fisheries policy. This will be achieved inter alia through reducing overfishing and overcapacity and reducing direct impacts (such as by-catch or impact on the sea bottom), as well as supporting marine-protected areas. The Integrated Maritime Policy will further define the boundaries of sustainability of human activities that have an impact on the marine environment as part of the implementation of the Marine Strategy Framework Directive.

· Cohesion policy. Cohesion policy will be given a stronger focus on the Europe 2020 priorities, including making the EU a more resource efficient, green and competitive economy. This will be achieved through a strong focus on results and conditionality, including in relation to environmental objectives. These objectives include promoting the implementation of the environmental acquis (water, waste, marine, nitrates, Industrial Emissions Directive, air quality, flood legislation) and funding the related environmental infrastructure; protecting and restoring biodiversity and ecosystem services, including through the development of green infrastructures and reducing and preventing desertification. Environmental proofing will be strengthened as part of cohesion policy.

· Research and innovation. The new Common Strategic Framework for Research and Innovation will contribute to catalysing the scientific and technological breakthroughs needed for the transition to a resource efficient economy. Continuing financial support for eco-innovation more broadly will also help to deliver smart and sustainable growth. Innovation partnerships will have a direct impact on resource efficiency, for instance on water, ecosystems, raw materials, and smart cities.

· In external action, the Pre-Accession Instrument will help candidates to finance the environmental infrastructure and capacity building needed to respect the EU acquis. Through policy dialogue at the regional and national level, the Commission will continue to mainstream support for environment under the European Neighbourhood Instrument. Environment should also be further mainstreamed into aid programmes for developing countries. Biodiversity and ecosystems are key global public goods and will be part of the planned thematic programme for global public goods and challenges. The Lisbon Treaty gives the EU a stronger role to play in multilateral environmental agreements and international environmental governance, which will be reflected in enhanced funding.

2.2. A dedicated instrument for Environment and Climate Action

In addition to mainstreaming, the Commission proposes to continue the LIFE+ programme and to align it more closely to Europe 2020 objectives. As is the case under the current programming period, the new instrument will cover within one programme a variety of actions in the areas of environment and climate action.

Under the Environment sub-programme[12], the instrument will focus on two types of project: new Integrated Projects, the number and financial share of which will gradually increase over the lifetime of the programme; and "traditional" projects. The Commission considers that integrated projects can play an essential role as a catalyst for achieving goals such as the protection and restoration of biodiversity and ecosystems, effective management of the Natura 2000 network, the promotion of environmental governance, waste and water management and to effectively mobilise other funds to these ends. Projects will continue to be selected for their EU added value and potential for transfer of know-how.

LIFE Integrated Projects are designed to demonstrate the sustainable implementation of environmental action plans[13] relating to major EU environmental directives, such as the Habitats Directive or the Water Framework Directive. Integrated Projects will support a series of specific activities and measures. Additional funding for these projects will be sourced from other EU funding programmes as well as national, regional and private sector funds and will be jointly directed towards the environmental objectives. LIFE funding would thus act as a catalyst, ensuring consistency and a strategic environmental focus, exploiting synergies to the full and more structured cooperation with other EU funds will be established through the Common Strategic Framework.

The Environment sub-programme will be organised according to the following priorities:

(a) LIFE Biodiversity, while still focusing on Natura 2000 and on the development and sharing of best practices in relation to biodiversity, will also target wider biodiversity challenges in line with the Europe 2020 biodiversity strategy target to maintain and restore ecosystems and their services;

(b) LIFE Environment will focus on supporting the implementation of EU environmental policy by the public and private sectors and in particular the implementation of environmental legislation relevant to the Europe 2020 resource efficiency objectives (such as the Water Framework Directive or the Waste Framework Directive).

(c) LIFE Governance will support the creation of platforms for the exchange of best practices for improved compliance with EU environmental policy priorities and enforcement, policy development and knowledge-based decision-making (e.g., wide dissemination of project results), with an emphasis on good governance. This strand will also support environmental NGOs and promote awareness-raising, advocacy and dissemination of environmental information, as these are inextricably linked to achieving good governance and full implementation and compliance.

2.3. Financing biodiversity

Financing the EU Biodiversity Strategy to 2020[14] requires mainstreaming biodiversity throughout the EU budget, both within the EU via the main funding instruments and through external action funding. To increase the efficiency of EU spending, it is also important to maximise synergies with climate finance through funding ecosystem-based adaptation and mitigation projects that also provide wider ecosystem services, both within the EU and externally.

The effective management and restoration of Natura 2000 protected areas is central to the attainment of the Europe 2020 target of halting and reversing the decline of biodiversity in the EU set by the European Council in 2010. At EU level, a strengthened integrated approach using the various EU sectoral funds, ensuring their consistency with the priorities of the Natura 2000 action frameworks, together with an enhanced LIFE Biodiversity strand, will provide a strong basis for the new Natura 2000 financing strategy.

Externally, the EU committed itself, along with other participating parties, at the 10th meeting of the Conference of the Parties to the Convention on Biological Diversity (CBD COP10) in October 2010 in Nagoya, to increasing substantially the mobilisation of financial resources for global biodiversity by 2020. Funding from the EU budget will be provided through the geographic and regional allocations of the EU's external action programmes as well as through the thematic programme for global public goods.

In addition to mainstreaming biodiversity into the external action budget, the Commission is also proposing the creation of a mechanism/fund outside the budget to pool together contributions from the Member States and the EU budget.

3. Implementation 3.1. Mainstreaming

Mainstreaming will be delivered via the structures and instruments described elsewhere in the sectoral policy fiches. In order to ensure the delivery of results, there will be clearly established benchmarks, monitoring and reporting rules for all relevant EU policy instruments, with appropriate indicators.

To maximise synergies between different policy objectives, a tracking procedure for environment-related expenditure similar to that proposed for climate-related expenditure is envisaged.

As regards biodiversity, the 'Rio markers' established by the OECD and already used by the Commission for external instruments will be integrated in the existing methodology for measuring performance used for EU programmes. They will also help to demonstrate the co-benefits of climate and biodiversity expenditures, and to highlight the biodiversity co-benefits of climate spending on REDD+ (Reducing Emissions from Deforestation and Forest Degradation) actions.

3.2. A specific instrument for Environment and Climate Action

The current LIFE+ programme is managed by the Commission in direct centralised management mode. The Commission considers that the future programme should remain centrally managed, but that management tasks could to a large extent be delegated to an existing executive agency. The extent, conditions and terms of the delegation will have to take into account the need for the Commission to maintain strong policy links as regards Integrated Projects.

4. Proposed Budget Allocation for 2014-2020

All figures in constant 2011 prices. Excludes funds for mainstreaming which are included within the budgetary allocations for sectoral funding instruments.

LIFE+ Programme (environment sub-programme) || €2.4 bn

External Action

1. Policy Objectives

The European Union is a global player by virtue of its population and economic power. With 500 million inhabitants, it accounts for over 25% of the world's gross domestic product and a fifth of global trade. The Union is also an active political player, with regional (in particular in its neighbourhood) and global security interests and responsibilities. In particular, it shows solidarity by providing more than half of all international development aid and is the world’s biggest donor of humanitarian assistance. It is actively involved in protecting human rights, promoting a decent work agenda, other universal values and respect of international environmental and social conventions.

The EU is increasingly active in conflict prevention, crisis management and peace building, through EU-led crisis management missions and EU crisis response and stabilisation instruments. The EU also supports UN and African Union peacekeeping and peace-restoring missions in fragile or war-torn countries. Moreover, the EU is committed to supporting the multilateral system and its reform, the Doha multilateral trade negotiations, the UNFCCC (United Nations Framework Convention on Climate Change) negotiations on climate change, the CBD (Convention on Biological Diversity) negotiations on biodiversity, negotiations on other multilateral agreements, G-8 and G-20 reforms and the global governance agenda.

External policies are therefore a major field of action for the EU, which has been reinforced within the new institutional framework of the Lisbon Treaty.

The EU uses financial instruments for external relations to support the implementation of these external policies, in particular in:

(1) Promoting and defending EU values abroad. Putting human rights, democracy and the rule of law at the core, recent events in different parts of the world call for a review of EU assistance to transitional and democratic processes and to civil society.

(2) Projecting EU policies in support of addressing major global challenges such as combating climate change, reversing biodiversity loss, and protecting global public goods and resources should be further strengthened. The Commission proposes to develop a proactive agenda of EU and mutual interests with third countries, with a specific focus on strategic partners.

(3) Increasing the impact of EU development cooperation, with the primary aim of helping to eradicate poverty. The EU will concentrate aid on those areas where the EU has particular expertise to offer, differentiating among partner countries and regions to ensure that aid resources are allocated according to needs, capacities, interests and commitments; improve aid coordination and policy coherence for development; and ensure adequate financing for development. A pan-African instrument will be created to support the implementation of the Joint Africa Europe Strategy, focusing on the clear added value of cross regional and continental activities. It will be flexible enough to accommodate contributions from EU Member States, African States, financial institutions and the private sector.

(4) Investing in the long-term prosperity and stability of the EU's Neighbourhood. The aim of establishing an area of stability, prosperity and democracy will be pursued both through preparing (potential) candidate countries for membership and through our renewed neighbourhood policy. The EU will be active in supporting democratic values and principles in its neighbourhood and a more equitable distribution of the benefits of growth through greater political cooperation and deeper economic integration to the south and the east.

(5) Enhancing European solidarity following natural or man-made disasters. Upholding the internationally agreed principles of humanitarian law and upgrading its capacity, in humanitarian aid and civil protection, the EU budget will support actions to anticipate, prepare for, prevent and respond more quickly to disasters and engage more flexibly in development actions to rebuild from crisis and to develop resilience for the future.

(6) Improving crisis prevention and resolution. EU action on crisis prevention and resolution, preserving peace and strengthening international security, including enhancing EU capacities for crisis preparedness will be increased.

An open Europe, operating within a rules-based international framework, is the best route to exploiting the benefits of globalisation that will boost growth and employment.

2. Instruments

The Commission proposes the following structure for the EU's future external action instruments:

2.1. Development cooperation

The Commission proposes to build on the current Development Cooperation Instrument (DCI) as regards its geographic and thematic scope. It proposes that the European Development Fund (EDF) covering cooperation with ACP (African, Caribbean and Pacific countries) and OCT (Overseas countries and territories) should remain outside the budget for the period of the next MFF.

2.2. Instrument for enlargement countries

A single integrated pre-accession instrument is proposed as the financial pillar of the Enlargement Strategy, encompassing all dimensions of internal policies and thematic issues. The aim will be to ensure that candidate countries and potential candidates are fully prepared for eventual accession. Emphasis will be put on socio-economic development, on regional cooperation, on adopting and implementing the acquis, and on preparing for managing internal policies upon accession. It will be implemented through national/multi-beneficiary programmes agreed with the beneficiaries and will also mirror the Structural Funds, the Cohesion Fund and the European Agricultural Fund for Rural Development (EAFRD), including their refocusing on delivering public goods. In addition, political and financial crisis-related instruments (Macro Financial Assistance, Instrument for Stability) will continue to be available for use in enlargement countries, when needed.

2.3. European Neighbourhood Instrument (ENI)

The European Neighbourhood Instrument (ENI) will benefit the EU's neighbouring countries supporting deeper political cooperation, closer economic integration with the EU and support to effective and sustainable transition to democracy. Cooperation with the EU's neighbours will be based on the principle 'more for more', in line with the conclusions of the Commission Communication 'A new response to a changing neighbourhood'. The ENI will provide the bulk of the EU funding to the Neighbourhood and will be complemented by other external instruments as required.[15]

2.4. Partnership Instrument

This new programme will provide ad hoc support for cooperation with all third countries (non-developing and developing) with a specific focus on strategic partners / emerging economies. It will finance activities to support the projection of EU policies abroad through bilateral cooperation and common approaches to challenges, economic partnerships and business cooperation, public diplomacy activities and networks, people-to-people links; the conduct of policy discussions and joint activities with individual