Opinion of the Committee of the Regions on the "9th and 10th Annual Reports of the Structural Funds (1997 and 1998) ERDF — ESF — EAGGF — FIFG"
Date: 2000-04-13
Institutions: European Committee of the Regions
Subjects: Structural Funds, activity report, regional policy, report

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Official Journal of the European Communities

8.8.2000

Opinion of the Committee of the Regions on the ‘9th and 10th Annual Reports of the Structural
Funds (1997 and 1998) ERDF — ESF — EAGGF — FIFG’

(2000/C 226/18)

THE COMMITTEE OF THE REGIONS,

having regard to the 9th annual report of the Structural Funds (1997) — ERDF — ESF — EAGGF — FIFG
(COM(1998) 562 final);

having regard to the 10th annual report of the Structural Funds (1998) — ERDF — ESF — EAGGF —
FIFG (COM(1999) 467 final);

having regard to the decision taken by its Bureau on 2 June 1999, under Article 265(5) of the Treaty
establishing the European Community, to draw up an opinion on the subject and to direct Commission 1
for Regional Policy, Structural Funds, Economic and Social Cohesion and Cross-Border and Inter-Regional
Cooperation to carry out the preparatory work;

having regard to the Draft Opinion adopted by Commission 1 on 2 February 2000 (CdR 220/99 rev. 3)
(rapporteur: Mr Willy Burgeon, President of the Union of Municipalities and Local Authorities of
Wallonia, B/PSE);

adopted the following opinion at its 33rd plenary session on 12 and 13 April 2000 (meeting of 13 April).

1. General background

1.5.
The European Regional Development Fund (ERDF) was
set up accordingly in 1975. At first it was used only to provide
compensation for national regional policy measures, in line
with national quotas fixed by the Council of Ministers (1).

1.1.
This opinion has a dual purpose. First, it picks up the
main themes in the annual reports, and, second, it analyses the
situation in 1997 and 1998.

1.2.
The COR will attempt to take an analytical approach,
focusing as much as possible on Structural Fund strategies and
their impact over time, and treating 1997 as a turning point
between past and future reforms.

To this end, a brief recap of

1.3.
intent
underlying the 1975 establishment of the Structural Funds and
the various reforms applied in 1984, 1988 and 1993 is useful.

the political

The beginning

1.6.
The 1972 (United Kingdom, Denmark and Ireland),
1981 (Greece) and 1986 (Spain and Portugal) enlargements
led the European Community to look at the regional conver-
gence issue more closely. This led on to the question of the
balance between geographical regions with differing levels of
industrial intensity (North-South, peripheral countries). The
effects of German unification and the future eastward enlarge-
ment of the European Union were also considered in this
context (2).

1.7.
Article 130c of the Treaty of Maastricht states that the
ERDF is ‘intended to help redress the main regional imbalances
in the Community through participation in the development
and structural adjustment of regions whose development is
lagging behind and in the conversion of declining industrial
regions’.

1.4.
The origin of the Funds lies in the Treaty of Rome and
in its mission to promote ‘overall harmonious development’
of the economies of the Member States and reduce ‘disparities
between the levels of development of the various regions and
the backwardness of the least favoured regions’.

(1) CRISP weekly newsletter — 1998 No. 1605-1606: ‘La réforme

des fonds structurels européens’ by Luc Vandendorpe, p. 6.

(2) CRISP weekly newsletter — 1998 No. 1605-1606: ‘La réforme

des fonds structurels européens’ by Luc Vandendorpe, p. 7.

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The 1984 reform

1993 reform (3)

Two major changes were made in 1984, one technical

1.8.
and the other political:

1.11.
In addition to bolstering the main principles of the
1988 reform, the 1993 reform developed two of them further
and brought in a new concept:

(1) flat-rate national quotas were replaced with indicative

allocation bands for each country;

(2) 20 % of ERDF funds were allocated directly to Community
programmes set up by the European Commission (1).

1.9.
The European Council thus gave the European Com-
mission a degree of financial autonomy. This change laid the
foundations for the principle of partnership between the
European Commission and the Member States.

The 1988 reform (2)

1.10.
much more effective tools geared to furthering their goals:

The 1988 reform equipped the Structural Funds with

(1) Structural Fund spending doubled between 1987 and
1993, rising from 15 % of Community spending in 1988
to 31 % in 1993.

(2) Essential changes were made to improve application of the

Funds:

— assistance was targeted at the poorest regions in the

Community,

— and focused on certain specific areas (infrastructure,

development of SMEs, training);

— more attention was given to the necessary planning

and coordination of measures.

(3) Priority objectives and the concept of eligible areas were

established.

(4) The concepts of horizontal and vertical partnerships and

programming came into being.

(5) The concept of additionality (financing provided by ben-
eficiary States must not fall below the levels allocated
before the Structural Fund contribution) was reaffirmed.

(1) C o n c e n t r a t i o n

The principle concentrating funds in the poorest
1.12.
regions of the Union was upheld, while focusing aid on six
priority objectives (1, 2, 3, 4, 5a and 5b).

(2) P a r t n e r s h i p

Partnership remains the cornerstone of the Structural
1.13.
Fund management system. The reform strengthened vertical
partnership by simplifying formal Commission approval pro-
cedures. The importance of horizontal partnership was also
confirmed, as was the need to involve the social partners in
the process.

(3) E v a l u a t i o n ( 4)

In the Committee’s view this aspect of the reform
1.14.
marked a major development. From this point on,
the
Structural Fund regulations included an obligation for Member
States and the Commission to conduct systematic programme
evaluations before, during and after implementation.

1.15.
The European conference on evaluation (Berlin, 2-
3 December 1996) thus specified three essential components
of a good evaluation:

— evaluations must be carried out before, during and after
the practical implementation of structural measures;

— evaluations must be based on the qualitative and quantitat-
ive information available to managers and also on inter-
views with the beneficiaries;

— evaluations must apply a number of

techniques and
methodologies whose conclusions can be recognised as
valid by the experts.

(1) CRISP weekly newsletter — 1998 No. 1605-1606: ‘La réforme

des fonds structurels européens’ by Luc Vandendorpe, p. 8.

(2) Points discussed in the CRISP weekly newsletter — 1998
No. 1605-1606: ‘La réforme des fonds structurels européens’ by
Luc Vandendorpe, pp. 9-14.

(3) Points discussed in the CRISP weekly newsletter — 1998
No. 1605-1606: ‘La réforme des fonds structurels européens’ by
Luc Vandendorpe, pp. 14-19.

(4) Points discussed in the CRISP weekly newsletter — 1998
No. 1605-1606: ‘La réforme des fonds structurels européens’ by
Luc Vandendorpe, pp. 18-19.

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2. Agenda 2000

Having briefly recapped the history of the Structural
2.1.
Funds, the Committee feels that activity in 1997 must be
considered within the context of the future strategy provided
by the new 2000-2006 reform.

2.2.
The Agenda 2000 reform was published by the
Commission on 16 July 1997. It had both an economic and a
political context. In economic terms, the background was belt-
tightening (resulting from the tough budgetary criteria imposed
for economic and monetary union), while the political back-
drop was enlargement of the European Union (1).

The new reform centred on four pillars (2).

(1) Continuing the Structural Funds and the Cohesion Fund

2.3.
The continuation of the Structural Funds is part of
the ongoing drive towards regional convergence within the
European Union. The continuation of the Cohesion Fund,
meanwhile, fits into a rationale of promoting social cohesion
and making it possible for the cohesion countries to carry out
national programmes aimed at fulfilment of the convergence
criteria for the third stage of economic and monetary union.

— cross-border, transnational and interregional cooperation,
aimed at promoting harmonious and balanced spatial
planning;

— rural development;

— human resources, paying special attention to equal oppor-

tunities.

(3) Developing partnership

2.6.
Structural Fund measures will be made more effective
by means of a new approach to the partnership between the
Commission and the Member States. Programme management
will be decentralised to Member States and regions, while in
return the Commission will demand a stricter selection process
for defining upstream priorities.

(4) Reinforcing evaluation systems

2.7.
Under Agenda 2000, the Commission has prepared
proposals for framework regulations to govern the Structural
and Cohesion Funds for the 2000-2006 period, with a view to
shoring up monitoring and assessment systems and controls.
The proposals include:

(2)

Increasing concentration

— a general regulation on the Structural Funds;

This principle is still central to the workings of the
2.4.
Structural Funds. Structural measures must thus focus more
closely on less-privileged communities, by targeting three main
objectives:

— specific regulations for each fund;

— a revision of the Cohesion Fund, and

— Objective 1: aimed at regions whose development

is
lagging behind; determined in accordance with per capita
GDP;

— Objective 2: for the economic and social regeneration
of regions with structural problems. This covers areas
undergoing industrial conversion, urban areas and rural
areas. The criteria used are broader than those used for the
former Objective 2;

— Objective 3: totally redefined, now aimed at specific human
resource development initiatives in all regions no longer
qualifying for Objectives 1 and 2.

Again in the interests of simplification, the number of

2.5.
Community initiatives has been reduced to three:

(1) Points discussed in the CRISP weekly newsletter — 1998
No. 1605-1606: ‘La réforme des fonds structurels européens’ by
Luc Vandendorpe, p. 20.

(2) Points discussed in the CRISP weekly newsletter — 1998
No. 1605-1606: ‘La réforme des fonds structurels européens’ by
Luc Vandendorpe, pp. 22-26.

— a regulation on a new pre-accession instrument.

3. The Structural Funds in 1997

3.0.
The points discussed in this section are based on or
taken from the European Commission’s 9th Annual Report on
the Structural Funds 1997 (ERDF — ESF — EAGGF — FIFG).

A. Overview

3.1.
In 1997, during discussions on the future reform of
the Structural Funds (2000-2006) and their global approach
to economic and social cohesion policy, the proposal was
made to reduce the number of objectives, simplify procedures,
concentrate assistance and reduce the number of programmes
implemented, particularly as regards the Community initiat-
ives. A call was also made to monitor the impact of Community
assistance, and to set objective criteria for measuring the
effectiveness of expenditure.

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3.2.
It was also concluded that, in the interests of greater
EU economic and social cohesion, the regions must diversify
their economic base and develop their innovation capacity. The
Structural Funds must give firmer support to the acquisition
of knowledge and continuing training, and must stimulate
employment and competitiveness in all possible ways.

essential in view of the ambitious goals the Commission has
set itself. Three decisions were taken in this area in 1997,
resulting in:

1. data sheets on eligibility of expenditure;

3.3.
The above thus contains references to such important
concepts as diversification, innovation, employment and com-
petitiveness.

2. a regulation (EC 2064/97) setting out the rules the Member
States must observe for financial control of operations
part-financed by the Structural Funds;

3.4. Work conducted in 1997 highlighted six priorities for
adjustment of the Funds up until the end of 1999:

3.

internal Commission guidelines on the application of net
financial corrections.

1. basic infrastructure

2.

the productive environment

3. RTD and the information society

4.

the environment and sustainable development

5. human resources and education

6. equal opportunities for men and women.

These priorities are designed to encourage national and
3.5.
regional partners to ensure the quality and effectiveness of
programmes.

In 1997,

3.6.
the Commission adopted 88 new pro-
grammes under the various objectives. Most, however, were
Objective 2 programmes for the 1997-1999 period. This is a
clear sign that safeguarding and promoting employment is an
absolute priority for future work. In addition to the current
approach, the Commission has restated its intention to use
appropriate means, when the time comes, to summarise the
content of the territorial employment pacts and thus draw
conclusions for job creation.

3.7.
Furthermore, 33 new Community initiative pro-
grammes were adopted. These included the final programmes
provided for under the initial allocation, plus five technical
assistance programmes, and the first programmes to be
financed following the distribution of the reserve decided by
the Commission in 1996. For the first time, it was possible to
confirm that all the Community initiatives originally planned
for the 1994-1999 period had actually been implemented, to
varying degrees, in 1997.

3.8.
The SEM 2000 initiative, designed to improve the
management and control of the Structural Funds, will prove

The thematic priorities for cohesion focus on five main

3.9.
areas:

(1) On the challenge of the information society, the report
rightly notes that the capacity of the regions to use the
the information society is an increasingly
tools of
important factor determining their competitiveness on
European and world markets.

(2) Regarding the urban agenda, the central concern is to draw
up a coordinated and coherent response to a growing
number of urban problems. The urban dimension must be
integrated more strategically into future Union policies.
Cities are and will remain the motors of economic growth,
competitiveness and employment.

(3) There is a need for a new Community Initiative for rural
development beyond 1999, to encourage private initiative
while safeguarding specific regional identity.

(4) Regional policy and competition policy. There are diver-
gences between the territorial coverage of national regional
aid and that of the regional objectives of the Structural
Funds. The population in areas eligible under the funds is
greater than that of areas eligible for assistance from the
Member States.

(5) Cohesion and competitiveness must be strengthened
through research, technological development (RTD) and
innovation. It is vitally important to direct these policies
towards the productive fabric of the region.

3.10.
From a more practical standpoint, 1997 saw the full
implementation of programming. It marked the start of the
second part of the current programming period and the third
full year of the funds’ work, with the exception of Spain for
Objective 1 and Italy for Objective 2.

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3.11.
Special attention was given to the SME sector, which
was earmarked 15 to 20 % of total fund resources. Several
points are worth noting here. Firstly, since the funds concen-
trate financing on Objective 1 regions, larger sums have gone
to SME development in those regions than in the other eligible
areas. Secondly, SMEs are the companies most exposed
to industrial change, while also being good generators of
employment. Objective 4 thus potentially concerns all workers,
and particularly those in danger of losing their jobs. This is
therefore preventive action, within an economic fabric made
up largely of SMEs. Once again innovation will inevitably play
a driving role in SME development.

3.12.
At the end of the 1994-1996 Objective 2 program-
ming period, unused appropriations amounting to ECU
848 million were transferred to the 1997-1999 period. At the
end of 1997, there were 1,026 programmes including 580
under the various objectives and 446 under the various
intense
Community initiatives. 1997 was also a year of
financial activity, as much work was done to clear the backlog
in payments of appropriations.

The following was committed:

— 62 % of Community contributions for the 1994-1999

period (46 % paid);

— 100 % of national programmes for all objectives in 1997
(for the first time in the 1994-1999 period), with the
exception of Objective 5a (36 % of commitments for the
‘fisheries’ strand).

3.14. More than ECU 1 billion, i.e. 5 % of payments made
over the year, corresponded to pre-1994 commitments, 40 %
of which went to projects in Italy.

i.e.

3.15.
Each of the Structural Funds may finance innovative
measures and technical assistance,
for studies, pilot
In 1997, 49 new pilot
measures or technical assistance.
projects and innovative measures were set up, costing a total
of ECU 100 million, under Article 10 of the ERDF. They fell
into three categories: urban pilot projects, spatial planning
pilot measures and TERRA interregional cooperation projects
in specific areas of spatial planning.

A further 200 innovative projects financed by the
3.16.
ERDF were implemented in the following areas: new sources
of employment, culture and heritage, regional
innovation
strategies (RIS), technology transfer (RTT), information society
(RISI) and external (ECOS-Ouverture) and internal (Recite II)
interregional cooperation.

3.17.
SME support provides the main theme of the Structur-
al Fund report for 1997. SMEs employ 66 % of the private
sector work force and generate 60 % of the turnover of EU
companies. Their growth is therefore a key factor in boosting
employment and reaching a higher level of economic and
social cohesion in the Union.

3.18.
For the current programming period (1994-1999),
15-20 % of Structural Fund resources are specifically devoted
to SME support, totalling between 23 and 30 billion ecus. This
financing is divided among a broad range of measures. The
most important include:

— aid for capital investment through direct grants or financial

engineering measures (venture capital funds);

The following was paid out:

— part-financing of business start-up areas;

— 100 % of the appropriations available for all objectives at
the end of 1997 (a clear improvement on 1996 when only
two objectives were fully paid out);

— training (Objective 4 and the

‘Adapt’ Community

Initiative);

— by the end of 1997, a cumulative total of 46 % of assistance

for the period.

For the Community initiatives, 56 % of total assist-
3.13.
ance for 1994-1999 was committed and 31 % paid out. In
1997, only 61 % of available commitments and 90 % (as
opposed to 80 % in 1996) of available appropriations were
actually used. Following delays on certain Community initiat-
ives, plans are afoot with the Member States to reprogramme
financial resources and reallocate them among the initiatives.

— advice and information services;

— measures to promote research and technological develop-

ment and integration into the information society;

— assistance for internationalisation.

3.19.
Information on programme implementation in the
Member States is provided in Annex I (Inforegio — Summary
of the annual report / 17.12.1998 ‘L’action des Fonds struc-
turels en 1997’).

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B. Evaluation and analysis of the impact of the Structural Funds

4.2.
Alongside this principal theme, the 1998 report high-
lights four major aspects of Structural Fund activity in 1998 in
the area of economic and social cohesion:

3.20.
defined objectives:

The Committee notes that there were two clearly

(1) promoting the efficient use of the funds

(2) preparing future programming of structural assistance.

(1) A d o p t i o n o f t h e r e m a i n i n g p r o g r a m m e s

The report states that as the penultimate year of the current
programming period, 1998 saw a consolidation of program-
ming including adoption of the last few programmes still to
be approved.

3.21. While the second should flow from the pooling of
ideas, the first, relating to the efficient use of funds, is relevant
here.

(2) A c c e l e r a t i o n o f f i n a n c i a l e x e c u t i o n

The European Union’s structural policy is often
3.22.
viewed as an important source of innovation in political and
administrative procedures. The analysis of regional disparities,
meanwhile, should enable major progress on theory.

As with 1997, the Commission report notes that 1998 saw
steps to clear the backlogs which had occurred at the beginning
of the programming period.

3.23.
There has therefore been a shift in focus from regional
growth to a mechanism to redistribute income between
regions and thus reduce regional disparities. A European
regional analysis is therefore based on the close intercon-
nection of positive and normative objectives (e.g. per capita
GDP and unemployment rates). Furthermore, while the Struc-
tural Funds are certainly a very important factor in furthering
interregional balance in the European Union, direct invest-
ment, business initiative, technological development and scien-
tific research remain the vital means of helping the less
prosperous Member States catch up.

4. The Structural Funds in 1998

(3)

I n c r e a s e d a t t e n t i o n t o p r i o r i t y t h e m e s

The priority task of safeguarding and promoting employment
continued to require sustained support. Therefore, the Com-
mission devoted special efforts in 1998, as it had the year
before, to giving new impetus to a number of its activities and
priorities. It is important to note that the report states that
Structural Fund operations will gradually take account of the
national action plans for employment, creating an overall
frame of reference for activities to promote human resources.

Furthermore, with a view to gauging the true effectiveness and
impact of the Structural Funds in the beneficiary regions, a
series of mid-term evaluations was conducted during 1998
under Objectives 1 and 6.

4.0.
The points discussed in this section are based on or
taken from the European Commission’s 10th Annual Report
on the Structural Funds 1998 (ERDF — ESF — EAGGF —
FIFG). Certain particularly significant passages from the 1998
report are quoted in their entirety.

Other thematic priorities were also studied more closely during
the year:

— Structural Fund assistance in the field of RTD and inno-

vation;

A. Overview

4.1.
The 1998 annual report’s main theme is local develop-
ment activities. Local development is a concept that has been
evolving for a number of years, and all tiers of authority are
becoming increasingly aware of its obvious benefits.

— consistency between cohesion policy and competition

policy;

— synergy between cohesion policy and transport;

— sustainable urban development;

— Europe-wide spatial planning through the ESDP.

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(4) P r e p a r a t i o n s

f o r
g r a m m i n g p e r i o d

t h e 2 0 0 0 - 2 0 0 6 p r o -

stood at around 10 % at the end of 1998. Furthermore, it was
very unevenly spread over the regions, ranging from 3 % or
4 % in some to 20 % to 24 % in others.

Following the adoption of Agenda 2000 in July 1997, concrete
preparation for the 2000-2006 period began in 1998. Pro-
posals for regulations to govern the Structural Funds in the
coming period were adopted by the Commission on 18 March
1998.

The 1998 report reiterates the principles set out in Agenda
2000, which are enshrined in the General Regulation on the
Structural Funds:

— reduction of the priority objectives to three;

— concentration of assistance on a smaller population and
concurrent adoption of transitional support for regions
which cease to be eligible;

— reduction of the Community Initiatives to three (later
widened again to four), each financed by only one Fund
(ERDF, ESF or EAGGF);

— simplification of programming and of the implementation

of assistance;

— clarification of responsibilities for monitoring and evalua-

tion;

— simplification of financial management by introducing a
system of automatic annual commitments, with payments
being used to refund proven expenditure;

— reinforcement of financial monitoring and the introduction

of a performance reserve.

B. Preparation of the preliminary draft guidelines for the Funds for

2000-2006

4.3.
The Committee notes that the 6th periodic report on
the economic and social situation and development of the
regions formed, in the words of the annual report, ‘a basis for
preparation of the preliminary draft guidelines for the Funds
for 2000-2006’.

This work demonstrated that the poorest regions were
4.4.
catching up with the rest of the Union at an astonishing rate,
largely thanks to growing economic integration. Nevertheless,
the report stresses that the Structural Funds too have played
an important part. The report states that the macro-economic
models used show that about one third of the convergence
observed would not have been achieved without them.

4.5. Much remains to be done, however, particularly on the
employment front. The annual report states that despite the
economic upturn, unemployment in the Union as a whole

4.6.
The issue of jobs obviously relates directly to unem-
ployment. It is worth noting that a high rate of regional
unemployment leads to social exclusion, which makes unem-
ployment more resistant to an economic upturn. To remedy
this situation, an integrated strategy is needed combining
measures to strengthen the economic base of the regions with
measures to improve access to the labour market (mainly
through training).

4.7.
Disparities in basic infrastructure and human resources
are tending to lessen, and there has also been progress in
innovation and in improving the efficiency of the administrat-
ive system.

4.8.
The situation in the central and eastern European
countries (CEEC) has changed quickly since 1993 or 1994.
Most of
the CEEC have finally begun to enjoy growth.
However, low production and inadequate productivity rep-
resent a considerable challenge for them, and the quality of
their infrastructure is in general well below that in the Union.

In this context, the Commission rightly notes that the
4.9.
Structural Funds will have a major role to play in tackling
these problems after enlargement. However, the report also
points out that considerable efforts will be required to install
the structures required for management of the Funds before
the CEEC are ready to take part in the Union’s structural
policy.

Since the Member States were to begin preparing the
4.10.
next generation of programmes during 1999, the Commission
considered it useful
to draw up some preliminary draft
guidelines in 1998, the aim being to help the national and
regional authorities to prepare their programming strategies
for Objectives 1, 2 and 3 and their links with the Cohesion
Fund.

4.11.
under three main headings:

The indicative guidelines are listed below, grouped

(1)

I m p r o v i n g r e g i o n a l c o m p e t i t i v e n e s s

The measures quoted in the 1998 report are: developing
infrastructure for transport, energy, the information society,
research and the environment; stimulating the development of
integrated strategies for RTD and innovation at regional level;
supporting the activity of firms, particularly small firms, by
industrial cooperation
supporting innovation and research,
and networking, the development of human resources, risk
capital and services to help firms.

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(2) P r o m o t i n g

e m p l o y m e n t — t h e C o m -

(2) R e s e a r c h , T e c h n o l o g i c a l D e v e l o p m e n t

m u n i t y ’ s t o p p r i o r i t y

a n d I n n o v a t i o n

The plan mainly involves the new Objective 3 (labour market
measures, combating exclusion, development of appropriate
training, introduction of positive measures for women), but
also the new Objectives 1 and 2, with a common reference
framework for human resources.

(3)

I n t e g r a t i n g u r b a n a n d
m e n t
s p a t i a l d e v e l o p m e n t o f t h e U n i o n

i n a b a l a n c e d f r a m e w o r k f o r

r u r a l d e v e l o p -
t h e

C.

Interim evaluations

4.12.
In the following points, the Committee aims to
outline the main findings of the interim evaluations. The report
explains that
these ‘seek to gauge the degree to which
programme implementation matches up to the original goals
and, where appropriate, to propose adjustments in line with
the degree of effectiveness achieved’.

4.13.
1998 saw the finalisation of four thematic evaluations
launched in 1997 (on SMEs, R&TD, environment, and equal
opportunities within the ESF) and of the evaluation of one
horizontal topic (partnership). The main findings are outlined
below:

(1) S M E e v a l u a t i o n

In the 1994-99 programming period, the SME sector will have
benefited directly from approximately EUR 21 billion spent
under Objectives 1, 2, 5(b) and 6. The evaluation concludes
that Structural Fund support has had a beneficial impact on
SMEs.

The evaluation conclusions highlight the need for upgrading
of existing R&TD capacities, better targeting of measures and
more transparent selection criteria and the need to foster a
climate of more systematic evaluation of results and impact.

More generally, the evaluations provide arguments for a clearer
shift towards measures focusing on innovation, the quality of
in particular
human resources and networking of players,
SMEs, at transregional and transnational level.

(3) E n v i r o n m e n t

The report states that the study assessed both the environmen-
tal impact of Structural Funds programmes and the extent to
which these programmes are contributing towards sustainable
development.

The evaluation concluded that the ex ante study of future
programmes should include an analysis of regional strengths,
weaknesses, opportunities and threats, addressing both
environmental and economic issues.

(4) E q u a l o p p o r t u n i t i e s i n E S F o p e r a t i o n s

As compared with the previous period, gender breakdown has
improved in both background data and data on programming
and implementation, although there are naturally variations
from one Member State, and particularly from one Objective,
to another.

Secondly, there is a general tendency for women to be under-
represented in ESF measures.

Lastly, the catalysing effect of Community assistance is a
constant feature carried over from the preceding period.

According to the report, case-study evidence points to the
value of financial engineering measures as a successful and
sustainable form of assistance, although the introduction of
such schemes will be a longer term prospect in some regions
where the financial services sector is currently weak.

(5) P a r t n e r s h i p

The evaluation identifies a need for improved targeting of
assistance, while also highlighting the value of vertical and
horizontal networks of SMEs, and the gains to be had from
involving private-sector partners in programme adminis-
tration. The Committee would underscore the point made in
the report that whilst in general a more commercial approach
to SME assistance is recommended, this must be sensitive to
particular regional or sub-regional circumstances.

The Committee notes that partnership has also made a major
contribution to the management and implementation phase
by bringing greater transparency, heightening the visibility of
measures, improving organisational coordination and provid-
ing a degree of innovation and flexibility.

However, its role should be strengthened with regard to the
transfer of good practice, monitoring and evaluation systems
and efficiency of programme management.

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Lastly, the report notes that a variety of forms and structures
of partnership can complicate management, but that this
problem could be overcome by introducing a single partner-
ship structure for each programme and distinguishing between
the roles of the various partners and their capacity to influence
decisions during each programming phase.

4.18.
The report states that the Committee has expressed
its support for the Commission’s strategic guidelines for
regions whose development is lagging behind, and that it
welcomed with interest the integrated approach proposed for
the new Objective 2, notwithstanding some doubts about the
eligibility criteria.

D. Financial control — ESF, ERDF, EAGGF — Guidance

4.14.

The main findings of the ESF visits were:

4.19.
The annual report also mentions that the COR has
asked for the partnership to be strengthened to help regional
and local authorities.

— failure to comply with the regulatory requirements on

publicising measures;

— too few — or no — inspections of part-financed measures;

4.20.
On the other hand, the report states that while the
COR welcomed the Commission’s communication on urban
issues, it also invited the Commission to draw up an urban
policy that would complement those of the Member States.

— lack of transparency in programme selection criteria;

— failure to comply with the deadlines laid down for
transferring advances and payments to beneficiaries.

4.15.
were:

The points most frequently noted on the ERDF visits

— difficulties in identifying declared expenditure in the

accounting systems for final beneficiaries;

— failure to comply with the Community Directives on

public procurement;

4.21.
Lastly, turning to agricultural matters, the report
mentions the Committee’s opinion on the proposed regulation
on support for rural development through the EAGGF. This
opinion, which was adopted on 14 January 1999, stressed the
importance of the targets set in the proposal and supported its
principles. However, it had doubts about whether the goals of
rural development policy as defined at the Cork Conference
could be achieved and drew attention to the inadequate finance
the failure to define the criteria for economic
available,
viability,
the integrated
the inadequate account
approach and the lack of detail on the role of the regional and
local authorities in the partnership.

taken of

— audit trail deficiencies which made it difficult to monitor
financial flows between the Community budget and final
beneficiaries.

5. Conclusion

4.16.

The EAGGF-Guidance Section visits detected:

— deficiencies in the management and inspection system;

5.1.
One major feature of 1997 and 1998 was the clearing
of the backlog which had arisen at the beginning of the
period in implementing appropriations. Overall, programme
implementation now appears satisfactory.

— part-financing of ineligible expenditure;

— unlawful deductions;

— administrative errors resulting from overestimation of

expenditure declared to the Commission.

5.2.
It should be noted, for both years, that the Union’s least
prosperous Member States — the funds’ main beneficiaries —
generally registered the best implementation rates, in particular
under Objective 1: Spain, Portugal and Ireland.

E. Dialogue with the Committee of the Regions

4.17. With regard to the future of the Structural Funds, the
report notes that COR opinions stress the importance of
economic and social cohesion as a pillar of integration and
solidarity in Europe.

5.3.
The implementation situation for Community initiat-
ives (CI) is quite different as there are a number of delays.
These are often the result either of the late approval of
programmes (many of which were adopted in 1996 and 1997
following the allocation of the reserve), or of the specific
nature of certain CIs, for instance the partnership in Urban
and Interreg II, or the highly specialised and innovative
measures under the SMEs Community Initiative.

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Structural Fund action therefore fits into a framework
5.4.
of diversification,
innovation, employment and competi-
tiveness. With safeguarding and creating jobs the absolute
priority, partnership between the regions, cities and munici-
palities must be part of a local economy which spawns
sustainable local employment, and preferably generates value
added.

5.5.
In its discussion of the 1997 report, the Committee of
the Regions felt that it would be useful to illustrate Structural
Fund action for SMEs. The financing is divided among a vast
range of measures directly targeting SMEs. The most important
include:

— small-scale infrastructure, and infrastructure to support

small businesses;

— assistance for creating and safeguarding small firms that

are an integral part of the local economic fabric;

— promoting research and innovation within small busi-

nesses, and networking between small firms;

— targeted training schemes
employees of businesses;

for both managers

and

— developing tourism resources using local potential;

— aid for capital investment through direct grants or financial

engineering measures;

— local development of agricultural and fishery resources;

— part-financing of business start-up areas;

— training, including management training;

— advice and information services;

— measures to promote RTD;

— measures relating to the information society;

— assistance for

internationalisation through innovative
measures, such as Europartenariat and Recite II, which are
intended to promote transnational commercial cooper-
ation among small firms or the SMEs Community Initiative.

5.6.
SMEs are gradually emerging as a structural policy
priority, and this is reflected in the greater financial resources
provided by the most recent programming documents.

5.7.
The 1998 report focuses almost entirely on awareness
and strengthening of the concept of local development. Over
recent years this concept has become a fully-fledged political
philosophy. Although local development is not a priority as
such at Community level, many recent decisions have taken
the territorial dimension of structural
greater account of
policies.

5.8.
The Committee would stress the abiding importance
given to local development in the various strands of the
Structural Funds, and welcomes the fact that this seems to be
the chosen direction for the coming years. The Committee
notes that although it is difficult to quantify the proportion of
local development schemes across all programmes, taking all
types of operation together it is estimated that in the current
programming period they account for about 10 % of overall
assistance from the Funds. Furthermore, it is estimated that
local development accounts for about 15 % of Community
finance in areas eligible under Objective 2. The Committee
would stress that these measures are found under all the
objectives, as listed in the annual report:

5.9.
Alongside the main theme of local development, the
past year’s Structural Funds activities in support of economic
and social cohesion can be summarised under four broad
headings:

— Adoption of the remaining programmes

— Acceleration of financial execution

— Increased attention to priority themes

— Preparations for the 2000-2006 programming period

5.10.
The Committee is pleased to note that greater
efficiency in the way the Funds are used will be sought,
principally by encouraging wider use of instruments based on
financial
levers (guarantees, capital holdings and repayable
grants), with variations in the maximum rates of assistance.
This will help increase the impact of the Structural Funds on
economic and social structures and make the Union’s regions
and firms, particularly small firms, more competitive.

The Committee would also highlight

5.11.
the 1998
report’s attention to the fact that unemployment in the Union
as a whole stood at around 10 % at the end of 1998, despite
it was very unevenly
the economic upturn. Furthermore,
spread over the regions. It is therefore important to be aware
that a high rate of regional unemployment leads to social
exclusion, which makes unemployment more resistant to an
improvement in the economy. A solution to this situation
requires an integrated strategy combining measures to improve
the regional economic base with measures to improve access
to the labour market.

5.12.
The Committee highlights the Commission’s com-
ments on the interim evaluations conducted during 1998. The
annual report makes five major points:

— regarding SMEs,

the evaluation identified a need for
improved targeting of assistance, particularly through the

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creation of specialised intermediaries, preferably organised
on a decentralised ‘one-stop shop’ basis;

thermore, it should be noted that a variety of forms and
structures of partnership could complicate management.

— on the subject of RTD, the evaluations favoured a clearer
shift towards measures focusing on innovation, quality of
human resources, and networking of players, in particular
SMEs, at transregional and transnational level;

— as regards the environment, the ex ante evaluation of
future programmes should include an analysis of regional
strengths, weaknesses, opportunities and threats, address-
ing both environmental and economic issues;

— attention must be drawn to the general tendency for

women to be under-represented in ESF measures;

5.13.
make the following points:

The Committee of the Regions would also like to

— it hopes to see a strengthening of partnerships with local

authorities;

— it calls for the development of an urban policy to
complement the policies conducted by the Member States;

— it is doubtful as to the chances of reaching the rural
development objectives defined at the Cork conference,
owing in particular to insufficient financial resources, the
failure to define criteria for economic viability, inadequate
attention to the integrated approach and a lack of detail
regarding the role of local and regional authorities in the
partnership.

— the role of partnership should be strengthened with regard
to the transfer of good practice, monitoring and evaluation
systems and efficiency of programme management. Fur-

5.14.
Finally, the Committee would end its opinion by
reiterating its strong support for all measures that confirm the
need to further local development.

Brussels, 13 April 2000.

The President

of the Committee of the Regions

Jos CHABERT