Opinion of the Economic and Social Committee on the 'Eighth Annual Report on the Structural Funds 1996` (98/C 235/08)

On 25 November 1997 the Commission decided to consult the Economic and Social Committee, under Article 198 of the Treaty establishing the European Community, on the 'Eighth Annual Report on the Structural Funds 1996`.

The Section for Regional Development and Town and Country Planning, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 21 April 1998. The rapporteur was Mr Little.

At its 355th plenary session (meeting of 27 May 1998), the Economic and Social Committee adopted the following opinion by 116 votes and 1 abstention.

1. Introduction

1.1. The European Commission's Report on the Structural Funds in 1996 is the eighth such annual report since the last major revision of the regulations governing the Structural Funds (the 1988 'reform` of the Funds).

1.2. The report is published in accordance with Council Regulations (EEC) Nos 2052/88 and 4253/88 both as amended in 1993 and, as required, details their operations during the year and the progress made towards achieving their objectives.

1.3. In November 1996, the Commission presented its first three-yearly report on Economic and Social Cohesion () as required by Article 130B of the Treaty of European Union and a précis of this closely-related report is incorporated in the report under review. This report on cohesion includes an assessment of the contribution made by the Funds to the progress being made towards economic and social cohesion. The Economic and Social Committee adopted an opinion () on this report on 23 April 1997.

1.4. Responding to requests from the European Council by means of a comprehensive communication entitled Agenda 2000, the Commission has outlined its broad perspectives for the development of the Union and policies beyond the turn of the century and for a broad financial framework having regard to enlargement. The document contains, inter alia, outline proposals for further reform of the Structural Funds with the stated aim of fostering competitive development and sustainable and job-creating growth throughout the Union. The Committee adopted an opinion () on 30 October 1997 providing a broad initial response to the Commission's proposals and will deal in more detail, in additional opinions currently under preparation, with the major facets such as the reform of structural policy in the light of the more detailed proposals () published by the Commission in March 1998.

2. Features of the Structural Funds in 1996

2.1. The various forms of assistance for the financial period have now been put into effect in all Member States with the adoption of the last Single Programming Documents and Community Initiative programmes in 1996 and the advent of multiannual programming. For the new Member States, 1996 was a year of key importance with the allocation of commitments advancing well.

2.2. The Objective 2 programmes for 1994-1996 were wound up although appropriations of ECU 859 million were carried forward to the next period. Amongst the preparations that were made for 1997-1999, the Commission established that the regions eligible for the latter period should be the same as for 1994-1996 with very minor changes. The overall population covered by objective 2 is still 16,4 %.

2.3. The Commission continued to monitor implementation, supporting preparations for interim evaluation. It also launched a series of thematic evaluations of the impact of the Structural Funds in a number of key areas such as research and development, small and medium-sized enterprises, the environment and equal opportunities. Work to utilize the outcomes of the evaluations was expected to commence in late 1997. In conjunction with the Member States, new guidelines for sound and efficient management were introduced. Weaknesses and irregularities in almost all Member States were again revealed.

2.4. The four principles central to the 1988 reform were kept under scrutiny. In the view of the Commission, there was an improvement in the way partnership took shape and substantial progress was made in obtaining verification that the principle of additionality was honoured.

2.5. Clear progress was made in making up the backlog in financial activity and execution of the Community budget was virtually 100 % for 1996. ECU 26,1 billion was committed by way of appropriations and payments amounted to ECU 22,4 billion.

2.6. The employment situation remained a major cause for concern during 1996 and the Commission sought to ensure that there was consistency between the measures part-financed by the Structural Funds and the strategy of the EU to give priority to tackling employment problems. Accordingly, job creation was established as first priority within the guidelines issued by the Commission to Member States for the preparation of Objective 2 programmes for 1997-1999. For the same reason, the Commission launched an initiative to promote territorial pacts for employment with part-financing from the Structural Funds.

2.7. The Commission also allocated the financial reserve of almost ECU 1,7 billion which had been set up at the time of the initial allocation for Community Initiatives over the 1994-99 period, taking into account a number of priorities: combating unemployment, equal opportunities and combating exclusion, the environment and the territorial dimension of structural policies.

3. General Comments

3.1. The report is both comprehensive and complex and it constitutes, in the main, a historical record and a reference source. It would be neither practical nor appropriate for the Committee to comment on all facets of the report.

3.2. In this opinion, the Committee concentrates on major issues arising in 1996, on issues which have been raised previously but are not yet resolved and on the merits of the Eighth Annual Report itself. As the Objective 2 programmes for 1997-1999 are the subject of a parallel opinion, to avoid duplication, no specific comments are made on the preparations made for these programmes in 1996 and to which reference is made in the report under review. Similarly, no specific comments are made here on the detailed proposals for reform of the Structural Funds regulations as these proposals will be the subject of one or more separate opinions to be prepared and adopted over the next few months.

3.3. The Committee notes that the Commission's report for 1996 is largely structured as for the previous year. One important change is the bringing together of all the information on the assistance from the funds for each country so as to provide individual overall views of the structural programmes implemented. The innovation of last year of dealing with one subject horizontally throughout the report has been retained, the topic this time being support for research and technological innovation.

3.4. The report falls into two main parts. The first takes a general look at what was achieved in 1996 and comprises four chapters (implementation of the Structural Funds in 1996, budget implementation, institutional matters connected with the Structural Funds, evaluation). The second looks in detail at the implementation of the Structural Funds and comprises six chapters: the first sets out the programmes and achievements in each Member State and the other five consist of financial tables giving details of financial implementation in 1996, implementation from 1994 to 1996, the regional breakdown of financial implementation, major projects, and ERDF and ESF pilot projects.

3.5. The Committee welcomes both the content and structure of the 1996 report and commends the Commission for its diligence in the production of this extensive document of some 350 pages and for meeting the November deadline for its publication. However, the time-cycle for production reduces the value of the report and, accordingly, the Committee supports the Commission's recently-stated intention to bring forward the date of publication in future years.

4. Specific comments

4.1. Partnership

4.1.1. The Economic and Social Committee has long been concerned with the setting up of satisfactory 'partnerships` whereby consultation will take place between the Commission, Member States and other relevant bodies regarding the preparation, financing and evaluation of Structural Funds operations. The new partnership arrangements introduced in 1994 were supported in principle by the Committee and it now acknowledges the progress that has been made by 1996 in the implementation of these arrangements.

4.1.2. The report refers to an internal Commission document in which preliminary proposals were made with a view to further improvement of the partnership concept being introduced for the period after 1999. Those proposals were taken forward within a Commission Communication on Community Structural Assistance and Employment () on which the Economic and Social Committee was not asked to give an opinion and were also consolidated within its Communication 'Action for Employment in Europe - A Confidence Pact` ().

4.1.3. Under the initiative approved at the July 1996 European Council to promote Territorial Pacts for Employment (initially on a pilot basis), specific guidelines have been adopted for the 'stronger partnership` deemed necessary for the project. The Committee has already expressed its support for the pacts and, on 30 October 1997, it approved an information report to help publicize them.

4.1.4. The Committee considers that, in due course, the Territorial Pacts should provide useful experience of such a stronger partnership. This will have relevance for the general operations of the Structural Funds, but, because of delays in implementing the pilot pacts, such experience may not be available and assessable before the framework and regulations for the next period are put in place. The report gives no further indication of how the Commission proposes to take forward its thinking on the future development of partnership. However, the Committee is aware that, in 1997, the Commission set in motion a thematic evaluation of partnership, the outcome of which it awaits with interest.

4.1.5. A redefinition of partnership has now been proposed by the Commission as part of the reform of the Structural Funds.

4.2. Programming

4.2.1. The delays which occurred during 1995 and 1996 in launching and implementing programmes have been largely caught up in 1996. Whilst that achievement is to be welcomed, the Committee remains concerned that a gap of probably some eighteen months on average arose between the winding-down of programmes for the preceding period and the setting-up of programmes for the 1994-1999 period. The vast number of assistance measures (now 492 for the objectives alone!) creates an enormous burden in terms of preparation, appraisal and approval and one that is apparently irreconcilable with the satisfactory closing of that gap.

4.2.2. The programme for Objective 2 regions will suffer twice from such delays because of the sub-division of the 1994-1999 period. Before the start of that period the Committee expressed the view, in its opinions () on the Amendment of the Structural Funds Regulations, that the period should not be sub-divided for Objective 2. In the event, negligible changes were made to the eligible regions and, if the Committee's recommendation had been adopted, the additional delays and administrative burdens could have been avoided.

4.2.3. The Committee continues to support simplification of programming procedures and, indeed, in its recent opinion on the Report on Economic and Social Cohesion it put forward specific proposals for rationalization and reduction of the numbers of objectives, funds and initiatives.

4.2.4. The Committee recommends that the timetable for preparation, appraisal and approval be brought forward in the cycle so that the lead time between the start of a new financial period and the launch of programmes is shortened considerably and calls on the Commission to issue comprehensive and clear guidelines as early as possible in the cycle. The implementation of such a timetable for the financial period 2000-2007 requires appropriate political decisions to be taken by the Council and the European Parliament early in 1999.

4.3. Structural Funds and other Community policies

4.3.1. Regional development is not determined solely by the regional policies of the Community and the Member States. Similarly, EU structural policies must operate within the overall economic environment and are subject to the effects of other policies.

4.3.2. The need for optimum consistency between policies has been stressed regularly by the Committee and it has frequently called for analyses of the relationship between the Structural Funds and other Community policies and on the impact they have on each other.

4.3.3. The Cohesion Report, to which reference is made in point 1.3 above, provides a perspective of the impact of all EU and national policies on economic and social cohesion, the fundamental aim of the Structural Funds. The Committee has warmly welcomed the report and, in its opinion thereon it stated that 'The critical value of the first Cohesion Report is that it places the funds in the context of a wider range of EU policies` ().

4.3.4. No matter the efforts made to take account of cohesion, it is inevitable that the opportunities and benefits of non-structural policies will have uneven regional consequences as does the whole process of economic integration. The recognition of countervailing pressures arising from non-structural policies is part of the rationale for the operation of the Structural Funds and these need to be given proper cognisance in the targeting of funds. In chapter II D of the Eighth Annual Report, the Commission places emphasis on the influence of the Structural Funds in assisting the objectives of other policies and merely makes some references to positive effects of those policies on cohesion. Whilst the Committee accepts that it is not appropriate to refer in detail to those countervailing pressures in annual reports (in contrast to the Cohesion Report), it considers that their existence should not be ignored.

4.3.5. The Committee regrets that the heading of chapter II D is misleading as the term 'complementarity` implies that EU policies are complementary without qualification (things or matters cannot be complementary to a degree). The term used is an unfortunate example of bureaucratic jargon and is, at best, unclear. It would be more informative to use 'Compatibility with other Community policies` as the heading of the chapter.

5. Research and technological innovation

The Committee welcomes the horizontal analysis of the operations undertaken by the funds for the technological development of the regions and supports the emphasis given to innovative products and services arising from applied research. The report underlines the EU-wide disparities in RTD indicators such as RTD expenditure and employment and access to telecommunications. The increasing emphasis being given to RTD measures under the Structural Funds in the 1994-1999 programmes, particularly in Objective 1 regions, is a welcome development. Also notable is the growing sophistication of technological measures (e.g. information and advisory services, technical education and training, the exploitation of telecommunications infrastructure, technology transfer mechanisms), the growing involvement of the private sector and the investment being made in complementary regional innovation/technology transfer strategies to promote a more analytical and strategic approach to RTD issues. It will be important for future reports and evaluation commissioned by the European Commission to assess the impact of these trends. The Committee notes with interest that a separate report on RTD and the Structural Funds is to be issued by the Commission early in 1998.

Brussels, 27 May 1998.

The President

of the Economic and Social Committee

Tom JENKINS

() COM(96) 542 final.

() OJ C 206, 7.7.1997, pp. 78-87.

() OJ C 19, 21.1.1998, pp. 111-115.

() COM(98) 131 final.

() COM(96) 109 final, March 1996.

() CSE(96) 1 final, June 1996.

() OJ C 201, 26.7.1993, pp. 52-58.

() OJ C 206, 7.7.1997, pp. 78-87, paragraph 1.10 of the opinion.