Communication from the Commission to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions - The results of the programming of the Structural Funds for 2000-2006 (Objective 1) [SEC(2001) 1140]
Date: 2001-07-05
Institutions: European Commission
Subjects: Cohesion Fund, Structural Funds, activity report, operational programme

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 5.7.2001
COM(2001) 378 final

COMMUNICATION FROM THE COMMISSION
TO THE COUNCIL, THE EUROPEAN PARLIAMENT,
THE ECONOMIC AND SOCIAL COMMITTEE
AND THE COMMITTEE OF THE REGIONS

THE RESULTS OF THE PROGRAMMING OF THE STRUCTURAL FUNDS FOR
2000-2006 (OBJECTIVE 1)

[SEC(2001) 1140]

This communication forms part of the Commission’s work programme for 2001. It includes
the main features of the Community assistance programmed for the regions eligible under
Objective 1 during the new programming period (2000-2006), with particular attention to an
assessment of the negotiations with the Member States and the value added by the
Community.

TABLE OF CONTENTS

Executive summary................................................................................................................ 3

Introduction ........................................................................................................................... 6

I - ASSESSMENT OF NEGOTIATIONS .............................................................................. 7

I - 1 - Quality of the plans submitted by the Member States.................................................... 7

I - 2 Partnership in the preparation of the programmes............................................................ 8

I - 3 Quality and usefulness of ex-ante evaluations ................................................................. 9

I - 4 Negotiating schedule..................................................................................................... 10

I - 5

I - 6

Taking account of the Commission’s July 1999 guidelines and adjustment of national
priorities. ................................................................................................................ 11

Taking account of the ESDP guidelines and action framework for sustainable urban
development ........................................................................................................... 12

I - 7 Introduction of new management systems in the Member States................................... 13

I - 8 - Integration between the Structural Funds and the EIB................................................. 14

I - 9 - The strategic reference frameworks of the Cohesion Fund .......................................... 15

II. -

THE EXPECTED IMPACT OF THE NEW PROGRAMMING and COMMUNITY
VALUE ADDED ................................................................................................... 15

II - 1 - Thematic concentration ............................................................................................. 15

II - 2- Macro-economic impacts ........................................................................................... 16

II - 3 - Impact on regional competitiveness........................................................................... 17

II – 4 - Taking account of and impact on other Community priorities and policies

(environment, competition, transport, information society, research and innovation,
small firms, equal opportunities)............................................................................. 18

II - 5 - Multiplier effect and additionality ............................................................................. 19

II - 6 - Benefits of the method of implementation ................................................................. 20

The annexes are included in the Commission staff working paper SEC(2001) 1140

2

EXECUTIVE SUMMARY

195 billion to the Structural Funds
The Berlin European Council decided to allocate
127.5 billion) would go to the regional development
for 2000-06 of which almost 70% (
programmes under Objective 1. These resources should result in a significant increase
in GDP in real terms by 2006 in the Member States concerned (6% in Greece and
Portugal, 2.4% in Spain and 4% in eastern Germany).

€

€

In addition, by 2006 the new programmes will have given a powerful boost to investment
(by 20% in Greece, 14% in Portugal and 6% in eastern Germany).

That is why the Commission believes it important to give an account of the results of the
negotiations in which it has engaged with the national and regional authorities.

***

The 2000-06 programming period offers fresh challenges and fresh opportunities for the
Objective 1 regions (those where per capita GDP is less than 75% of the Community
average), where disparities with the rest of the European Union remain considerable despite
the progress achieved over the last ten years.

Significant progress in convergence is expected, particularly in the least developed
regions

The programmes should enable the economies of the least prosperous countries and regions to
continue to catch up, thanks to the more favourable economic situation in the Union as a
whole and a more effective combination of the efforts of the Member States with those of the
Union. By encouraging investment, the Structural Funds help to set
the conditions for
sustainable long-term growth. The estimated macro-economic impact in terms of growth in
GDP are significant, especially for Greece and Portugal.

The value added by negotiations: better quality plans, some important strategic
adjustments

The indicative strategic guidelines adopted by the Commission in July 1999 provided a useful
basis for negotiations on the plans and programmes. They established the basis for the
discussions on the nature of the choices made by the Member States in terms of priorities and
strategic objectives and the corresponding allocation of resources.

Systematic and integrated ex-ante evaluations have helped to increase the coherence and
quality of plans, mainly by improving the links between the diagnosis of socio-economic and
environmental problems and the formulation of priorities.

In general, the results of negotiations reflect a greater effort to concentrate assistance on the
research and
four priority areas in the Objective 1 regions:
innovation, the information society and the development of human resources. Furthermore, in
the four countries concerned (Greece, Spain, Ireland and Portugal) the establishment of
strategic reference frameworks should help to ensure greater consistency between ERDF and
Cohesion Fund assistance in the fields of transport and the environment.

infrastructure,

transport

3

Improvements to the system of implementation which are still to be consolidated

The effectiveness of assistance will be closely dependent on compliance with the conditions
for implementation and management of the programmes decided jointly with the Member
States. From this point of view, considerable progress has been made, particularly as regards
the partnership related to the preparation of the plans and the establishment of systems for
more rigorous monitoring, surveillance and evaluation. The Commission was able to play an
active role in introducing these provisions by defining methodological guidelines and
the introduction of the
conducting discussions through the partnership.
performance reserve has been the subject of close monitoring from the programming
documents through to the programme complement, in an effort to ensure that both the criteria
selected and the arrangements for allocating the funds help to achieve maximum effectiveness
and transparency.

In particular,

Although the outcome was generally satisfactory, attention should be drawn here to certain
difficulties:

(1)

(2)

(3)

The five-month period allowed for negotiating programming documents proved to be
too short (average time taken to conclude programme adoption: eight months to one
year), reflecting the thorough nature of the discussions between the Commission and
the Member States in pursuit of improved quality. There is a trade-off between the
time taken for the negotiations and the quality of the outcome, particularly as regards
aspects such as the provision of adequate management and surveillance systems, the
integration of evaluation into decision-making, consultation through the partnership
and compliance with Community policies, particularly those on the environment and
competition rules.

The Commission will be seeking to ensure that the Member States honour their
commitments in this respect.

The programme complement has sometimes been regarded as a separate phase of
programming although its role is to clarify the content of the programme priorities
through a detailed description of the measures and quantification of the associated
objectives and indicators, including for the performance reserve. In some cases, this
has caused management difficulties because the authorities responsible for preparing
the programme complements were separate from those which had negotiated the plans
and programmes.

In several Member States, the general guidelines for the new systems for management,
surveillance and monitoring were defined but the details of how these systems are to
specified.
be

implemented

and made

operational

remain

fully

be

to

The Commission invites the Member States to step up their efforts in these areas of
vital importance for effective use of the Structural Funds, in line with the new
implementing regulations and particularly the computerised management systems
(also to help avoid delays in interim payments). The Commission intends to
undertake a comparative analysis of financial management and control systems
which should help to identify best practice and to promote new solutions to problems
arising in this field.

4

(4)

Despite the progress made as regards partnership during the preparation of the plans
and programmes, it is not always clear how this principle will be applied during
implementation of the assistance.

The Commission will seek to ensure the that the operation of the partnerships is
sound. It should be aswidely drawn as possible and more pro-active and responsible
as regards the management of assistance.

These less positive aspects do not call into question the validity of the principles set out in the
regulations governing the Structural Funds. The results-oriented management model, one of
the pillars of this reform, is demanding and difficult to implement but it has already helped to
increase the transparency and quality of programming in 2000-06. The mid-term evaluation of
the programmes will show the extent to which this had an effect on implementation. The
Commission will draw the lessons from this, especially with regard to the reconciliation of
simplicity, quality, effectiveness and transparency. Such lessons should help in the
forthcoming exercise to prepare programmes for new Member States and for the next
generation of Structural Funds programmes after 2006.

5

INTRODUCTION

On 24 and 25 March 1999, the Heads of State and Government meeting in Berlin decided to
€
allocate
213 billion to structural measures in the Union between 2000 and 2006. Of that
€
amount,
195 billion (at 1999 prices) was to go to the 15 existing Member States through
assistance from the Structural Funds and of that figure 69.7% was earmarked for the regions
eligible under Objective 1. These regions are located in 13 Member States: all except
Denmark and Luxembourg.

The main aim of the revision of the regulations governing the Structural Funds approved by
the Council in June 1999 was to make Community structural assistance more effective
without compromising the basic principles of the earlier reforms from 1988 to 1993. The
main innovations introduced by the amended regulations concerned:

a) concentration of the priority Objectives of the Structural Funds: the seven Objectives were
reduced to three;

b) strict application of the criterion of concentration (the 75% eligibility rule)1

c) introduction of a system of transitional support for regions or areas which were eligible
under the regionalised Objectives in 1994-99;

d) introduction of a performance reserve: 4% of the commitment appropriations in each
indicative national allocation would be set aside in the performance reserve;

e) enlargement and strengthening of the partnership to increase added value. The partnership
operates in accordance with the subsidiarity principle: selection of the partners remains a
matter for the Member State;

f) simplification of the system of programming by incorporating major projects and global
grants into the other forms of assistance;

g) decentralised programming of measures: the Member State or managing authority adopts
the programme complement - and not the Commission - after it has been agreed by the
Monitoring Committee;

h) changes to the rules on financial management which now have a clearer and simpler basis
to permit better implementation of the budget and a establish a more effective link with
programme realisation (“n + 2”);

i) the Member State takes general responsibility for implementation, monitoring and the
effectiveness of assistance, so that there is a precise definition of the specific responsibilities
of the managing authority, the Monitoring Committee and the authorities responsible for
surveillance;

j) evaluation is no longer regarded as a separate exercise but, while remaining independent,
forms an integral part of the process of preparing, implementing, monitoring and revising
programming: it is becoming a management tool;

1

The Commission has proposed a Council Regulation on the NUTS (Nomenclature of statistical
territorial units).

6

k) closer links between structural policies and the European Employment Strategy and the
priorities of the National Action Plan for Employment;2

l) the legislation for rural development measures was extensively amended and simplified by
Regulation (EC) No 1257/1999 with measures to be funded either by the Structural Funds or
the EAGGF Guidance Section in Objective 1 regions and by the EAGGF Guarantee Fund
elsewhere;

m) implementation of a global system for information and early monitoring of compliance
with Community rules on State aids.

I - ASSESSMENT OF NEGOTIATIONS

I - 1 - Quality of the plans submitted by the Member States

In general, the quality of the programming documents submitted by the Member States was
higher than for the previous period, although it sometimes fell short of what might have been
expected. This higher quality was partly due to the intense preparatory work on their
programming documents undertaken by the Member States with the Commission.

The discussions with each of the Member States had two aims:

– to fill the gaps in information missing from the programming documents, especially to

meet the quality requirements set out in the new regulations;

– to find the best possible compromise among the various priorities for assistance so that the

programmes achieve maximum impact.

The quality of the documents presented by the Member States was not uniform. In general,
even where documents met the minimum requirements of the regulation - which was often the
case - the quantification of the objectives at the level of the priorities and items of assistance
was inadequate, as was the ex-ante evaluation, particularly as regards the environment and
equal opportunities. These weaknesses had to be remedied during negotiations and sometimes
in the other programming documents at later stages (programme complements). This was
particularly true for Finland and Portugal.

In all, of 116 programmes, the Commission considered three (in Germany, Italy and the
United Kingdom) unacceptable because vital elements were missing.

In some cases, the Commission had to make considerable efforts to secure further information
from the Member States to prepare the programming documents. This was particularly true of
the Spanish plan and some French programming documents. The extent of the changes in the
field of rural development under the EAGGF was generally not fully appreciated. This
resulted in plans which lacked sufficient detail to allow them to be assessed as required by the
Regulation.

The plan for Spain did not show in a clear way how the development strategy at national level
linked with the strategies proposed at regional level. However, with the cooperation of the

2

Communication from the Commission to the Council, the European Parliament and the Economic and
Social Committee on European Social Fund support
the European Employment Strategy,
COM(2001) 16 final.

for

7

Spanish authorities, some substantial improvements were able to be made to the programmes
and the general assessment for Spain is considered satisfactory.

In some cases, the quality of documents submitted varied widely even within the same
Member State. In Germany, for instance, although preparation of the programming documents
was based on the ex-ante evaluation, the draft programmes for the regions of Brandenburg,
Saxony-Anhalt and Thuringia contained substantial gaps which took a number of months to
remedy. Within the United Kingdom, the quality of the initial documents varied widely,
ranging from the higher quality achieved for Cornwall and the Isles of Scilly to that for
Northern Ireland, initially declared inadmissable by the Commission, where the background
conditions were sometimes difficult.

I - 2 Partnership in the preparation of the programmes

The establishment of a decentralised, broad and effective partnerships is a key factor for the
success of the programmes supported by the Structural Funds. The partnerships enable
synergies to be maximised, the commitment of all involved at regional and local level to be
strengthened and contributions from a wide variety of sources to be mobilised.

Application of the principle of partnership has changed considerably since the first generation
of programmes when it was more limited in scope. Since then, the situation has changed
significantly perhaps most notably in Spain, Germany and Italy.

the beginning of the current period, a feature was that

the different programming
At
documents were sent for consultation to the partners likely to be involved in the Monitoring
Committees. In general, the involvement of the partnerships at an early stage was more in
evidence than in the past, perhaps particularly in Germany.

However, it should be noted that the quality of the reporting to the Commission on the
consultation process and its results was very variable, with many Member States simply
recording that
indicating when, how or even with whom
consultation had been engaged. The types of partners involved were far from uniform, even
sometimes varying from one programme to another within the same Member State.

it had taken place, without

Partnership appears to be particularly well developed in countries such as Ireland, the United
Kingdom, Finland and Sweden. The latter can be cited as an exceptional case since, in
addition to the more traditional forms of implemention, websites have been set up to enable
the public to interact with the authorities as programmes develop. In contrast, the Commission
has found that in some Member States, partnership remains rather formal and institutional
(Greece, Portugal and Spain), with, for example, the presence of the socio-economic partners
but only in a limited capacity. The associations and bodies active in the areas of the
environment and equal opportunities in general played a more limited role in the preparation
of programming.

As a rule,
the more extensive the partnership in the preparation of the programming
documents, the more the process was long but perhaps more fruitful. However, in some
instances, a broad and active partnership also meant that programming took longer since any
changes that were decided required new rounds of discussion and consensus building. This
was in evidence in the UK.

The amount of information provided by the national or regional authorities about
the
participation by the partners in the Monitoring Committees also varied very considerably

8

from one programming documents to another, with some simply noting that the partners were
associated. The same was true of the rights granted to the partners in those Committees: they
often have a different status from the other members, either because they may not vote or may
vote only in certain circumstances or because they attend only on a consultative basis or for
information.

It is to be hoped that the decentralisation of programme management to the Member States
will militate in favour of the involvement of partners other than the national authorities,
particularly in the Monitoring Committees with their expanded role. Such an approach should
mean that the specific knowledge which these partners have of their region, and its socio-
economic problems and opportunities, can be put to good use in operational terms. The mid-
term evaluation should help in the assessment of the impact of the partnership in this regard.

I - 3 Quality and usefulness of ex-ante evaluations

The purpose of the ex-ante evaluation is to help in the design and formulation of the plans and
programmes. It is organised by the authority responsible for programming in the Member
State using a frame of reference laid down by the Commission.

All Member States complied with this statutory requirement but used a variety of procedures,
which meant that the role played by ex-ante evaluation varied somewhat.

Most Member States made use of an independent external assessor. Greece, Italy, Ireland,
Northern Ireland and Nord/Pas-de-Calais used an internal evaluation structure which was,
however, independent of the authorities responsible for programming. Spain was the only
country to use an internal evaluation amounting effectively to a self-assessment.

Most of the programmes received annexed the evaluation report and often a summary in the
form of a specific chapter of the plan describing the evaluation work.

The quality of the ex-ante evaluations varied both between and within Member States. The
more systematic approaches included that for Italy, where the ex-ante evaluation undertaken
under the auspices of the evaluation unit in the Ministry of the Treasury formed an integral
part of the development plan for the Mezzogiorno. It was based on the following points: a
detailed SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis at the level of
the priorities and sectors; development of an ad hoc model to estimate the impact of the
plan and an analysis of internal consistency to ensure that resources were correctly allocated
between priorities.

In Ireland, the ex-ante evaluation process was carried out on the basis of preliminary work to
identify the development priorities for 2000-06. This evaluation confirmed the strategy and
the priorities proposed in the plan. However, it drew attention to a number of points, including
the weak links between the priorities and the Objectives of the plan and the weight given to
the productive sector because of
the favourable economic circumstances for private
investment, a weight which was considered excessive by the assessors.

It is, however, difficult to assess the role actually played by the ex-ante evaluations because
the Commission was not present to witnees the outcome of discussions between the Member
States and experts involved. A variety of factors suggest that a substantial contribution was
made by the assessors to drafting the plans for the new period, which were in general of
higher quality than in the past as regards the strategy adopted and more transparent as regards
the goals to be achieved:

9

– the best constructed plans were those presented by the Member States which had
made greatest use of dialogue with the assessors. This was particularly true of the
UK programming documents, where ex-ante evaluation provided essential support
for the negotiations;

– overall, ex-ante evaluations played a triple role, providing criticism, particularly
of past experience, advice for the preparation of the plan and justification of the
priorities and goals selected, providing useful extra information over and above
that already available in the programming documents;

– in general,

the evaluation approach was also followed at

the level of the
operational programmes, so permitting verification of consistency between the
guidelines in the plans and the priorities selected in the programmes.

The lack of ex-ante evaluation was a reason why the Commission rejected a draft programme
(the “Transport” operational programme in Italy).

Most of the plans included a detailed analysis of the starting position as regards the horizontal
priorities such as the environment and equal opportunities but, although the analyses of the
impact expected from the strategy and assistance were sometimes very detailed (as in the case
of the environmental evaluation in the plan for Spain resulting from the contribution of the
environmental authorities), most were not up to the quality required by the regulation. In the
later phases of programming, evaluations will have to be more detailed and based on precise
information on the types of measures envisaged and the extent to which they are integrated
into the plans and programmes in question.

I - 4 Negotiating schedule

The new programmes were decided within the partnership on the basis of the programming
documents proposed by the Member States.

Of the 123 programming documents received by the Commission,3 the time required for
approval was as follows:

– only three programming documents were adopted within the five months allowed

by the Regulation;

– between five and eight months: 20 programming documents;

– between eight months and one year: 71 programming documents;

– more than one year: 29 programming documents.

Adoption of these programmes took longer than the five months foreseen by the rules. Further
time was normally essential to meet the quality requirements imposed by the regulation,
particularly with regard to financial management, detailed quantified objectives, the ex-ante
assessment of the impact expected, environmental information and compliance with the
the
principle of additionality. When asking for additional information and clarification,

3

Seven Community support frameworks, 19 single programming documents and 97 operational
programmes.

10

Commission simultaneously suspended the deadline for a time considered reasonable time for
the Member States to reply.

In the case of Belgium, the programming document was approved within the statutory period
of five months on the basis of an undertaking by the Belgian authorities to provide the
Commission with a whole series of further information and indicators when they submitted
the programme complement. Since the Commission has not yet received this information, it
has suspended its opinion on the programme complement.

Only in exceptional cases was the statutory period of five months adequate. These exceptions
and instances where the time did not greatly exceed five months were the result of preparation
and particularly intense negotiations with the national and regional administrations. This was
the case in Sweden, Finland, Portugal and Austria.

Only a few Member States met the statutory deadline of three months to send the programme
complement to the Commission. As of mid-June 2001, of the 116 programmes (SPDs and
these programme
OPs), a programme complement existed for only 42.
complements, the amounts had not been broken down by the level required in the standard
categories of fields of assistance. The Commission is continuing to insist on this point with
the Member States so that it can have an accurate view of the types of projects financed by the
Funds.

In some of

I - 5

Taking account of the Commission’s July 1999 guidelines and adjustment of
national priorities.

It is mainly up to the Member States and the regions to define their development strategies in
compliance with Community priorities.

The indicative Guidelines adopted by the Commission in July 1999 were intended to help the
national and regional authorities to prepare their programming strategies. They set out the
Commission’s priorities based both on past experience in programme implementation and on
other guidance for those Community policies affecting sectors linked to EU structural
policies. This means that the extent to which these strategic priorities are taken into account is
a major component of the added value by the Community.

During the negotiations, the Commission was concerned that the indicative Guidelines should
be followed to the greatest possible extent by the Member States, particularly with regard to
vocational training, the information society, the environment and sustainable development,
help for small firms, support for declining rural areas and urban development.

Although the extent to which the Guidelines were taken into account varied depending on the
Member State and the nature of the programmes, they did achieve useful adjustments to
national priorities in programming for 2000-06. This was true of the initial proposals made by
Spain, Greece, France and Italy. In the case of Spain, there was also a change in relative terms
in the priorities as compared with previous periods. Development options were adjusted by
the
giving priority to measures to develop a knowledge society (innovation, R&D,
information society) and the environment
(environment, natural surroundings, water
resources), mainly at the expense of those concerning transport and energy networks. The
measures favoured now account for 7.9% and 16.1% respectively of the total resources in the
current Community support framework as compared with 4.7% and 11.7% in the previous
one.

11

In the specific case of Greece, the development plan submitted to the Commission had a
relatively traditional focus on public works. While recognising the importance of basic
infrastructure and a continuing, if declining, role for direct subsidies, the Commission sought
to increase the emphasis on investment in human resources and on the effects of programming
on quality of life more widely.

Elsewhere, adjustments were more minor. For example, in Austria, the Commission insisted
during negotiations that special attention should be paid to developing business applications.
There is a special measure for information technology and telecommunications (networks and
applications) to develop IT activities concentrating on the development and implementation
of services and applications and networks for use in business. In Portugal, the plan generally
took account of the Commission’s Guidelines. However, a substantial adjustment was made
to emphasise the information society and the development of human resources.

The documents proposed by other Member States (e.g. Sweden, Finland, Germany, Ireland
and the United Kingdom) took the Commission’s Guidelines fully into account. In Sweden
the programmes supported and supplemented the national Action Plan for employment which
itself forms part of a strategy which has yielded good results in terms of jobs. In Ireland, the
European guidelines for employment are an important component. In Sweden, Finland,
Ireland and Northern Ireland, sustainable development and equal opportunities for men and
women are general goals which apply to all measures.

In conclusion, the Commission Guidelines have generally provided a helpful programming
instrument, particularly in the case of the Community support frameworks, and at the level of
the selection of priorities. Their role, however, tends to become less central as programming
becomes more detailed, in the operational programmes and programme complements.

I - 6

Taking account of the ESDP guidelines and action framework for sustainable
urban development

The aims of many of the Objective 1 mainstream programmes are consistent with the policy
aims and options of the European Spatial Development Perspective (ESDP). Although most
programmes do not refer specifically to the ESDP, in around one quarter of them there is a
specific reference, either in general terms or with reference to particular parts of the
document. This is so especially in the case of the UK, German and Spanish programme
documents, mainly in the regional and SWOT analyses, review of the policy context or
descriptions of the regional strategy. A key factor appears to be the presence of an underlying,
broader regional strategy within national policy. For example, some of the UK programmes
(Merseyside, South Yorkshire, South West and Northern Ireland) are based on a broader
regional development strategy, the Regional Planning Guidance, which reflects the strategic
approach of the ESDP as well as other documents.

An analysis of the programmes suggests that, at present, the development strategies being
followed should have a positive impact on the territorial cohesion of the Union, particularly as
regards transport and access to information networks, the environment and the account taken
of urban problems.

Such strategies, effectively implemented, should help to promote a more balanced and
polycentric development within each region, less uneven patterns of wealth creation, and a
more sustainable model of growth.

12

Urban priorities within the programmes feature prominently in the programming documents
and the assistance planned shows a high level of convergence with the Urban Framework for
Action for sustainable urban development, which appears to be more closely linked to the
Structural Fund programmes than to the ESDP. Some programmes (e.g. most of the UK
programmes and some German ones - Berlin) have a strong urban dimension. Some of the
themes promoted by the Commission Urban Framework for Action, such as social inclusion,
local governance and empowerment and environmental regeneration, appear to be transversal
and present in most Objective 1 strategies (if not always with an urban focus). It is worth
noting that some programmes are constructed so as to promote complementarity between the
Urban Community Initiative and the Objective 1 strategy.

A more detailed analysis of how the ESDP options and the Framework for Action for
sustainable urban development are taken into account will be provided in the Communication
which the Commission will present on the results of the programming negotiations for 2000-
06 in the Objective 2 areas.

I - 7 Introduction of new management systems in the Member States

The programming documents are required to include a description of the management and
control systems to be introduced, including the designation of the managing and paying
authorities and their respective responsibilities4 and a description of the arrangements for
financial control and financial corrections, building on the systems that were already being set
up (in accordance with implementing Regulation (EC) No 2064/975).

However, when the programming documents were submitted to the Commission, not all the
details on the implementation systems were available. As a result, the description of the
management and control systems was often the weakest part of the programming document
(the programmes for Sweden and France can be cited in this context) and simply listed the
provisions of the general regulation. Sometimes the paying authorities were not mentioned.

Alongside bilateral negotiations on this part of the programming documents, in February 2000
the Commission initiated collective discussions with the Member States within the Structural
Funds Committees on practical ways of implementing the general Regulation as regards
management and surveillance. This work, which resulted in two implementing Regulations,
inevitably had implications for the final arrangements put in place by Member States6. These
implementing regulations require more advanced and effective financial management and
control systems than in the past,
featuring greater separation of duties, standardised
procedures and improved and integrated information systems.

In March 2001 the Commission departments responsible for the programmes adopted a
proactive approach in the form of prior audits of the management and control systems in all
Member States to verify that they met the standards of financial management required by the
regulation,
including arrangements for making financial corrections. Where necessary,
recommendations for adapting systems are being made to Member States and these will be

4

5

6

How the managing authority will fulfil its responsibilities for sound financial management under Article
34 of the Regulation, including maintaining a reliable information system.
Checks of management and control systems, sample checks of 5% of expenditure over the life of the
programme, maintenance of the audit trail and independent certification of accounts before closure.
On 2 March 2001 the Commission adopted two regulations laying down detailed rules for the
implementation of Council Regulation (EC) No 1260/1999 as regards management and control systems
(Reg. (EC) No 438/2001) and the procedure for making financial corrections (Reg. (EC) No 448/2001).

13

kept under continuous review. At this stage, an initial survey of the Member States suggests
that they will all experience some degree of delay because they awaited final adoption of the
implementing regulations before taking steps to apply them. The main outlines of
management and control systems are in place but many organisational details still remain to
be decided.

In connection with the preparation of programme complements, the Commission has also
brought forward the arrangements for the exchange of data on programmes, as required by the
regulation. Finland was one of a number of Member States which tested the electronic
transfer of data to the Commission system in the last programming period and also included
the data transfer requirements for the new period in the programming documents. Other
Member States did not honour their commitments in this regard. As regards computerisation,
a considerable effort is still needed.

In some cases, the new programming period has permitted rationalisation of the system for
taking financial decisions. In Finland, for example, the financial decision-making system in
the regions was simplified at the beginning of the new period, concentrating most ERDF,
ESF, EAGGF and FIFG decisions under one umbrella agency (‘one-stop-shop’). In Sweden
the responsibilities of the managing and paying authorities were decentralised to one of the
County Administrative Boards (CAB) in each programme area.

Elsewhere, as in Spain, negotiations have resulted in a compromise: the managing authority is
not
the region, but still a central authority in Madrid, with the regions having joint
responsibility.

In Greece, approval of the programming documents required the passage of legislation
recasting the national system for the management and surveillance of the Structural Funds.

To sum up, overall the negotiations resulted in a better description of responsibilities as
regards management and financial control and a clearer definition of reporting requirements
for the regional management committees and the Monitoring Committees. However, the
Commission is concerned at the time taken by the Member States to implement the new
systems which will enable them to meet
these responsibilities, particularly as regards
computerisation and retrospective applications for payment when expenditure is eligible.

I - 8 - Integration between the Structural Funds and the EIB

The programming documents normally include the four Structural Funds, either as separate
priorities or as autonomous programmes (e.g. fisheries). The design of the programming
documents has normally permitted full application of
the principles of coherence,
concentration and integration at the level of the priorities. However, no systematic attempt has
been made to use the multifund approach (ERDF, ESF, EAGGF-Guidance Section and FIFG)
at this level. This approach is to be found mainly in the regional programmes, but to a lesser
extent in the multiregional programmes and much less in the sectoral programmes. Hence the
degree of integration between the four Structural Funds varies depending on whether the
profile of programmes adopted by the Member States is primarily regional or sectoral.

The EIB will be called on to participate in the development strategy of the Community
support frameworks in some Member States through loans, an indicative estimate of which is
given in the programming documents. It will contribute mainly in the area of major transport
and energy infrastructure, infrastructure for water supply and waste treatment, research

14

infrastructure, national systems to support the development of small firms, finance for local
and urban development and the knowledge society.

In the case of the Single Programming Documents, although the national and regional
authorities and the EIB did not wish to put a precise figure on the Bank’s contribution, there is
provision for it to help finance some major projects.

In some Member States (e.g. Portugal and Germany), the EIB took part in the negotiations.

I - 9 - The strategic reference frameworks of the Cohesion Fund

In the 2000-06 programming period, the Cohesion Fund is being implemented with reference
to a “strategic reference framework”, which is a special instrument for coordination between
the Structural Funds and the Cohesion Fund7. These reference frameworks in the fields of
transport and the environment are intended to avoid inconsistencies or overlaps in strategies
or specific measures and take maximum advantage of complementarity between the Structural
Funds and the Cohesion Fund.

In two Member States,
the strategic reference frameworks were drawn up through
consultation between the Member State and the Commission, since they formed an integral
part of the operational programmes for transport and the environment.

In the transport sector, priority was given to the TENs. The reference framework for the
environment covered three sectors which were priorities for assistance (waste, water supply
and water treatment).

In Greece, to make management of operations financed by the Cohesion Fund more efficient,
it was agreed to restrict financing to major projects or to packages of regional projects with a
significant financial mass. Also, again to improve the coherence of ERDF and Cohesion Fund
action, it was agreed that the managing authorities of the relevant operational programmes
would be responsible for technical project selection for both Funds.

II. -

THE EXPECTED IMPACT OF THE NEW PROGRAMMING AND
COMMUNITY VALUE ADDED

II - 1 - Thematic concentration

The concentration of expenditure on a limited number of policy areas is aimed at ensuring
that the priorities defined in the programmes reflect both the factors underlying economic
growth and the EU’s political priorities. As the second Report on Economic and Social
Cohesion8 stresses, Community structural measures are selective and complementary to those
of the Member States.

7

8

The main components of these strategic reference frameworks are: the quantification of the goals to be
achieved by the end of the programming period, the planned strategy for achieving the goals set,
definition of the links between ERDF assistance and that from the Cohesion Fund, planned investment
and the arrangements for applying the ‘polluter-pays’ principle.
“Unity, solidarity, diversity for Europe, its peoples and its territory Second report on economic and
social cohesion” - adopted by the Commission on 31 January 2001.

15

For the Objective 1 regions, there have been some changes in the distribution of the funds
between the three major areas of assistance – infrastructure, human resources and productive
investment (see table “Breakdown by categories of expenditure for Objective 1” in Annex 1).

On the basis of the available programme complements, the share of spending on infrastructure
seems to decrease for the period 2000-06, to around 28% of the total, one third of which is for
transport networks, with a high concentration of investment in the four cohesion countries.

The share of expenditure allocated to investment in human resources is around 30%. Higher
priority is given to active labour market policies and to strengthening education systems
(especially in Italy and Portugal).

The share of expenditure on productive investment (around 42%) appears to the same as in
the previous period. However, it seems to be declining in the cohesion countries and Italy
because of a decline in direct aid to industry as stricter rules on public aid are applied. There
has also been a shift towards indirect and softer forms of support for the development of small
firms.

The programmes seem set to play a major role in supporting environmental protection, which
accounts for over 10% of the total allocated for Objective 1. Money is also directed towards
improving access to peripheral regions9 and developing training, research and innovation
activities, which are essential to development of the knowledge society and the knowledge-
based economy and which, because of national budget constraints, could not be fully carried
5-6 billion will go direct to the
out without Community support. Estimates suggest that
information society and reducing the digital gap. Other measures, particularly those to help
small firms, will contribute more indirectly to the development of new technologies.

€

in the development strategies for the seven-year
Some trends now seem to stand out
programming period which are regionally rather than sectorally targeted. There appears to be
greater concentration on the structural factors of competitiveness which determine long-term
growth in the Objective 1 regions, particularly transport, RTD and innovation, the information
society and human resources. There is also greater concern about the integration of the
environment and the promotion of sustainable development.

A more detailed analysis will be carried out when the figures from the programme
complements are available, using the standard categorisation of fields of assistance (included
in Regulation (EC) No 438/2001).

II - 2- Macro-economic impacts10

Particularly in the countries and regions which are their major beneficiaries, the Structural
Funds have a significant impact on growth and the process of catching up as well as on total
employment and the level of productivity. That impact is all the greater to the extent that it is
accompanied by a stable macro-economic background resulting from economic and monetary
union.

9

10

In Greece, for example, investment in major transport networks will be 150% of the figure in 1994-99.
This chapter may usefully be supplemented by Part III of the Second report on economic and social
cohesion: “Unity, solidarity, diversity for Europe, its peoples and its territory Second report on
economic and social cohesion” - adopted by the Commission on 31 January 2001.

16

Furthermore, the multiannual programming method used by the Structural Funds encourages
a discplined approach over the medium-term. In general, the planning process helps to reduce
uncertainty.

Compared to a situation without assistance, the contribution of the Community support
frameworks (Structural Funds and national expenditure) will increase GDP in real terms by
around 6% in Greece and Portugal and 2.4% in Spain.
the effects are
comparatively slight (+1.8%), because the Structural Funds are less significant (under 10%) in
terms of total national public expenditure11. In eastern Germany, simulations suggest that
GDP will grow by 4% in 2006. In all cases, it is expected that long-term increases in the level
of GDP, resulting from supply-side effects on growth will continue beyond the end of the
programming period, even if CSF investment is assumed to end in 2006.

In Ireland,

The programming documents will stimulate the level of investment up to 2006, particularly in
Greece (20%), Portugal (14%) and eastern Germany (6%), which will increase effective
demand and, in due course, productivity. The impact on employment will be significant,
particularly in Greece and Portugal, but will
tend to fall off after 2006, because the
productivity gains are assumed to have fully passed through into higher real wages.

In terms of gross fixed-capital formation, the share of Community assistance devoted to
investment represents on average 1.2%, but around 10% in Greece and Portugal - see table
“The importance of the Structural Funds in structural expenditure and gross fixed-capital
formation in the Member States” in technical Annex 1.12 These figures show that, without
Community transfers, economic growth, of which investment is the main component, would
be much lower in the cohesion countries which are its main beneficiaries. However, the
impact has declined compared with the previous programming period.

II - 3 - Impact on regional competitiveness

Although structural policies tend to be finally judged by their impact on growth and economic
catching up, it is also important to look at their impact on the key factors which determine the
competitiveness of the economies concerned. Substantial progress will continue to be made in
the field of basic infrastructure and other sectors such as R&D, access to knowledge and the
information society and opportunities for life-long education and training where territorial
imbalances are particularly acute. Some impacts will be more marked in their nature than
others as the examples below demonstrate.

In the field of transport, continuing improvements to the road system will result in reducing
the gaps, especially as regards the trans-European networks. Furthermore, a shift towards rail,
particularly in Spain and Portugal, should have a favourable impact on the environment. The
basic structural nature of
they will contribute to the
these investments means that
development of economic activities and sustainable jobs in Objective 1 regions.

In the field of R&D and the information society, the greater emphasis placed on integrated
strategies for innovation and the interaction of academic research centres with the world of
business will help make the economy more competitive and facilitate its international

11

12

In 2000-06 Community assistance (Structural and Cohesion Funds) represented 2.9% of GDP in
Portugal, 2.8% in Greece, 0.6% in Ireland and 1.3% in Spain.
If finance from the Cohesion Fund is included, in investment terms, Community assistance (Structural
and Cohesion Funds) plays a decisive role since, as an annual average, it accounts for 12.3% of total
investment in Greece, 2.6% in Ireland, 5.5% in Spain and 11.4% in Portugal.

17

integration. Similarly, the greater dissemination of services and application of the information
society to small firms (e.g. electronic commerce will concern 15% of small firms in Greece)
will help achieve this goal. The aim of making the regions more competitive is in line with
Community policy for creating a ‘European research area’ with an emphasis on the regional
dimension in research policies.

Finally, it should be noticed that support for the European Employment Strategy, mainly from
the European Social Fund, will boost human resource development and help respond to local
labour market requirements and job opportunities. This will make it easier to improve the
productive capacity of regions and to expand employment in accordance with the employment
rate targets set out in Lisbon and Stockholm.

II – 4 - Taking account of and impact on other Community priorities and policies
information society, research and
transport,

(environment, competition,
innovation, small firms, equal opportunities)

The impact of the strategy in the programming documents on Community policies cannot be
accurately assessed until the programme complements are available. However, during the
negotiations the Commission sought
the principal policies concerned
(environment, research, information society, etc.) were thoroughly dealt with. In the cases of
the programming documents, this resulted in the establishment of priorities directly linked to
the Community policies and, in the programme complements, to the preparation of measures
specific to those policies.

to ensure that

In general, the programmes reflect the presence of other Community policies in two ways:

– in the programme implementation chapter which ensures that competition,13
public procurement, environment and gender balance policies are fully taken into
account at the project selection stage;

– by way of cross-cutting themes meaning that environmental sustainability, the
information society and equal opportunities policies are elements integrated into
individual programme priorities and measures.

The impact on the other Community policies has been regarded as generally positive.

In the field of the environment,
the programming documents pay special attention to
compliance with legislation and consistency with Community policy. This is true, for
example, for measures concerning waste (which must appear in the management plans drawn
up in compliance with the directives on waste and adopted by the national or regional
authorities), infrastructure for waste-water treatment (which must comply with targets set out
in the directives on urban waste water), assistance for productive activity and the directives on
the prevention and integrated control of pollution, the eco-management and audit system and
so on. The “Habitats” (92/43/EEC)14 and “Birds” (79/409/EEC)15 Directives require proper
management of the areas forming part of the Natura 2000 network. On 14 March 2000, the

13

14

15

In particular, all the information required to assess the compliance of the measures planned with the
Community rules on State aids form part of every item of assistance and are included, updated where
necessary, in every programme complement.
Council Directive 92/43/EEC of 21 May 1992 on the conservation of natural habitats and of wild fauna
and flora (OJ L 206, 22.7.1992).
Council Directive 79/409/EEC of 2 April 1979 on the conservation of wild birds (OJ L 103, 25.4.1979).

18

Commission drew up guidelines to define the link between implementation of the structural
measures for 2000-06 and compliance with the Natura 2000 directives. These guidelines
apply only to those Member States which, at the date when the Commission approves the
programming documents, had not yet notified the sites to be protected under the “Habitats”
and “Birds” Directives. They require the programming documents from the Member States to
include clear and irrevocable commitments both to present the lists of sites to be protected
and as regards a formal guarantee that
let such sites deteriorate when
implementing assistance part-financed by the Structural Funds.

they will not

Apart from this elements of ‘compliance with the law and enforcement’, the negotiations
provided the opportunity to improve integration of the environmental dimension into all
priorities
the
environmental damage and application of the ‘polluter pays’ principle.

through the principles of preventive action, correction at

source of

It is very difficult to quantify the impact of the equal opportunities strategy, particularly since
the action plans have not yet been drawn up (see programme complements). However, a
qualitative assessment suggests that significant progress in this field can be expected. It
should encourage the participation of women in the labour market, a reduction in
unemployment among women and an increase in the activity rate.

II - 5 - Multiplier effect and additionality

To ensure that the Community Funds have a real impact in the eligible regions over and above
the development effort of each Member State, since 1989 the regulations on the Structural
Funds have included application of the principle of additionality, under which the Member
States are required to maintain national structural expenditure in a programming period at
least the same level (excluding the EU contribution) as in the previous period.

For the programming period 2000-06, total public structural expenditure planned in the
Objective 1 regions should, across the EU as a whole, amount to an annual average of
90
billion. The structural expenditure of the Member States (excluding the EU contribution)
should account for just over 1% of Union GDP on average, but 7% in Greece and almost 5%
in Ireland and Portugal. The Structural Funds should also account for an average of 18% of
total public expenditure (national and Community) in these regions. However, this percentage
amounts to 29% in Spain and 37% in Portugal, so providing substantial support to the public
development effort in those countries - see also point II-2.

€

Compared with 1994-99, Community and national structural expenditure planned for 2000-06
should increase by an annual average of 8.6% across the Union (see table “Changes in the
volume of the structural expenditure of the Member States in the Objective 1 regions and the
regions receiving transitional support” in technical Annex 1). However, these changes vary
sharply from one Member State to another. For example Germany, which made an
outstanding structural investment effort in the previous programming periods to help the new
Länder, expects structural expenditure to fall by 10% in those regions, which will reduce its
structural expenditure to a level which is less exceptional when compared with the other
Member States. By contrast, the 20% increase in expenditure in Italy is to be considered in
relation to the lower than expected level of spending in 1994-99, and is based on the
government’s commitment to increasing capital expenditure in order to stimulate the South’s
economic development.

19

II - 6 - Benefits of the method of implementation

A new, simplified and more strategic programming system

The new programming system has been simplified by reducing the number of programmes,
particularly in Spain, by integrating the Funds at regional level, and in Italy. It should provide
some “flexibility” in management, particularly as regards the programme complements, in a
way compatible with the statutory provisions as regards quantified objectives and monitoring
indicators. The useful role played by ex-ante evaluations should also be noted: in many cases
they helped increase the coherence and quality of the plans by enabling close links to be
forged between the diagnosis of the socio-economic problems and the formulation of
priorities and strategic objectives. The Community guidelines also meant
that some
significant adjustments could be made to the regional development strategies proposed for
this period.

A more inclusive and responsible partnership

Management responsibilities in 2000-06 have been defined on the basis of the principles of
decentralisation and subsidiarity. The direct consequence of those principles is a requirement
for greater transparency, particularly as regards financial management, checks on specific
measures and project selection procedures, and improved demarcation of responsibilities
between those taking programming decisions, programme managers and paying authorities.

Preparation of the new programming documents demonstrated greater awareness of the role
of the partners in programming. Although such a broad partnership has positive aspects, it
may, however, result
in delays in the decision-making process precisely because of the
complex procedures for consulting all the partners. There is therefore a correlation between
expanding the partnership and the strategic direction of the programming documents which
will have to be considered in future.

Particular mention should be made of the involvement of the environmental authorities in the
Member States. Where cooperation between the authorities responsible for programming and
those responsible for the environment was most structured and systematic, the quality of the
plans and programmes was better, particularly as regards sustainable development. The
the programming
constructive involvement of the environmental authorities throughout
process for 2000-06 and the networking of these authorities should not only make
environmental work more sustainable but also result in the more integrated implementation of
assistance and measures (e.g. in Spain).

A monitoring system based on indicators and quantified objectives

The Commission and the Member States are required to ensure effective monitoring using
quantified objectives and indicators defined in the programmes approved. These indicators
have been structured so as to describe the socio-economic situation in the region or sector
concerned and measure the effects of assistance. They range from indicators of physical
implementation (provision of infrastructure, amount of training etc.) to indicators of results
(immediate gains in efficiency) and socio-economic impact described in terms of changes in
the structures of production and employment. Significant progress may also be detected as
regards the establishment of systems of shared key indicators (e.g. eEurope indicators), so that
the efficiency of programmes, priorities or measures can be compared. A good example is
Scotland, where this type of approach has been developed on the basis of precise
methodological guidelines.

20

Management including an approach to evaluation

The regular evaluation of assistance is increasingly regarded as a management tool which can
help improve the quality and effectiveness of assistance. While substantial progress has been
made, especially in those Member States where a culture of evaluation was in its infancy, it is
now up to the managing authorities to organise the mid-term evaluation process and facilitate
the pro-active use of the results within the partnership. Framework structures for evaluation
have been set up to that end through the establishment of working or steering groups and the
establishment of specialist evaluation units with their own staff and resources. The
development within national and regional administrations of an internal evaluation capacity is
becoming a key element
in ensuring the better integration of evaluation in programme
management.

The performance reserve, a fresh incentive to efficiency

Introduction of the “performance reserve” provides evaluation - and more broadly the
management of assistance - with a new dimension because it constitutes an incentive to
achieve predetermined objectives for each programme. A concrete effect of the introduction
of this instrument has been to increase the extent to which objectives are specified using
indicators. This mechanism has also had to take account of the special
operational
institutional and administrative features of each Member State. In those which have a federal
system (Germany, Austria, Belgium), funds are allocated at the level of the priorities in each
programme. The United Kingdom has opted for a mixed system, combining an approach at
the level of priorities for Scotland, Wales and Northern Ireland with a system of competition
between programmes in the English regions (Merseyside, Cornwall, Yorkshire and
Humberside). Other countries, including the main beneficiaries of the Structural Funds, set
ambitious goals for the application of this principle which even exceed the statutory
requirements, by setting up a programming reserve (Portugal) or a national supplementary
reserve linked to targets for simplifying administrative procedures (Italy).

***

21