Outlook report of the Committee of the Regions on "Governance and simplification of the Structural Funds after 2006"
Date: 2003-07-02
Institutions: European Committee of the Regions
Subjects: EU regional policy, Structural Funds, governance, management

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II

(Preparatory Acts)

COMMITTEE OF THE REGIONS

Outlook report of the Committee of the Regions on ‘Governance and simplification of the
Structural Funds after 2006’

(2003/C 256/01)

THE COMMITTEE OF THE REGIONS,

having regard to the White Paper on European Governance presented by the European Commission in
2001, which called on the Committee of the Regions to ‘play a more proactive role in examining policy,
for example through the preparation of exploratory reports in advance of Commission proposals’;

having regard to the cooperation protocol of September 2001 between the European Commission and
the Committee of the Regions, which encourages the Committee of the Regions ‘to draw up strategic
documents reviewing matters which the Commission regards as important; these “outlook reports” shall
explore in greater depth problems in areas where the Committee of the Regions has the appropriate local
information resources’;

having regard to the letter of 10 September 2002 from Commissioner Palacio to the CoR president,
Mr Bore, suggesting that the Committee of the Regions ‘prepare the outlook and impact reports and
outlook opinions listed in the appendix to this letter’;

having regard to the letter of referral of 23 July 2002 from Commissioner Barnier to the CoR president,
Mr Bore, requesting a Committee of the Regions opinion on implementation of programmes financed
under the Structural Funds, to consider for example how management of cohesion policy could be
simplified after 2006, in accordance with the first paragraph of Treaty Article 265;

having regard to Treaty Article 161 on economic and social cohesion, which stipulates that ‘Without
prejudice to Article 162, the Council, acting unanimously on a proposal from the Commission and after
obtaining the assent of the European Parliament and consulting the Economic and Social Committee and
the Committee of the Regions, shall define the tasks, priority objectives and the organisation of the
Structural Funds, which may involving grouping the Funds. The Council, acting by the same procedure,
shall also define the general rules applicable to them and the provisions necessary to ensure their
effectiveness and the coordination of the Funds with one another and with the other existing financial
instruments’;

having regard to the decision of its Bureau of 9 October 2002 and the document entitled ‘Outlook and
impact reports: the CoR’s priorities and working methods’;

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having regard to its Opinion of 15 February 2001 on ‘The structure and goals of European regional
policy in the context of enlargement and globalisation: opening of the debate’ (CdR 157/2000 fin) (1);

having regard to the Second Report on Economic and Social Cohesion of 31 January 2001 (COM(2001)
24 final) and the Committee of the Regions opinion on that report (CdR 74/2001 fin) (2);

having regard to the First Progress Report on Economic and Social Cohesion — Conclusions and next
steps (COM(2002) 46 final) and the Committee of the Regions opinion on that report (CdR 101/
2002 fin) (3);

having regard to the Second Progress Report on Economic and Social Cohesion (COM(2003) 34 final);

having regard to the draft outlook report (CdR 389/2002 rev.) adopted on 30 April 2003 by its
Commission for Territorial Cohesion Policy (co-rapporteurs: Mr Raffaele Fitto, President of the Puglia
region (IT-EPP) and Mr Jean-Claude Van Cauwenberghe, Prime Minister of Wallonia (BE-PES));

adopted the following outlook report at its 50th plenary session of 2 and 3 July 2003 (meeting of 2 July).

PART ONE — APPROACH ADOPTED

The current debate concerns both enlargement and the
Convention and reform of the Treaties, i.e. the need for a new
model of governance for cohesion policies.

1. Objectives

Following the political decision taken by the Heads of State
and Government to enlarge the European Union with the
accession of 10 new Member States, it seems necessary to
reformulate the economic and social cohesion policy of the
European Union.

Cohesion policy, as already enshrined in the Treaties, is an
instrument by which to achieve the principles of solidarity,
cooperation and redistribution and is a cornerstone of inte-
gration of the EU’s peoples and territories. For more than two
decades cohesion policy has acted as a visible policy instrument
illustrating the commitment of Member States to tackle
structural deficiencies together. The overall impact has been
profound and positive, as shown by the Cohesion Reports
regularly adopted by the European Commission.

It is on the basis of the new provisions contained in the
cooperation protocol signed by the European Commission
and the Committee of the Regions that Commissioner Barnier
has asked the Committee of the Regions for its views (in
the form of an outlook report) on implementation of the
programmes financed by the Structural Funds, and in particular
on ways in which management of cohesion policy could be
simplified after 2006.

The European Commission will take this report into account
when drawing up its Third Report on Economic and Social
Cohesion (planned for December 2003), which will set out the
future course of cohesion policy.

The objectives of this report are: (1) to evaluate the current
state of implementation of programmes financed through the
European Structural Funds, specifically by local and regional
authorities, based on the broadest possible consultation of
managing authorities and regions in the European Union; and
(2) to draw conclusions and make concrete proposals with a
view to reforming cohesion policy after 2006.

Nevertheless, major disparities remain across the Union,
between Members States, between regions and inside regions.
These wide disparities act as a drag on the competitiveness of
the Union as a whole. The forthcoming enlargement will
significantly exacerbate territorial imbalances within the EU:
this reinforces the general case for maintaining and improving
a strong European cohesion policy.

2. Methods

(1) OJ C 148, 18.5.2001, p. 25
(2) OJ C 107, 3.5.2002, p. 27
(3) OJ C 66, 19.3.2003, p. 11

This report is based on the findings of the consultation exercise
(in the form of a survey) which used the four key tools
described below. It does not summarise the findings, but
supplements them as part of a proactive initiative designed to
enable the Committee of the Regions to contribute significant
added value to the debate on the future of European cohesion
policy

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2.1. Questionnaire sent to the political authorities responsible for
the bodies currently administering the European Structural
Funds

sidelines of the COTER Commission meeting of 19 February
2003 and concentrated on the issues raised by the question-
naire and the conclusions of the focus groups.

A questionnaire was sent to the presidents of all the EU regions
before Christmas 2002. The response rate was high — around
70 % — testifying to the regions’ interest in this initiative.

2.4. Regular contacts between the rapporteurs and their experts
and the European Commission, especially the DGs that
manage the Structural Funds

An analysis of the trends observed and proposals made was
presented to the COTER Commission.

Information is exchanged for example on statistics relating to
implementation of the Structural Funds. This information has
been used by the rapporteurs in formulating their proposals.

2.2. National focus groups with the political authorities responsible
for administering the Structural Funds, within the national
delegations to the Committee of the Regions

During February 2003 national focus groups met in virtually
all the Member States under the political responsibility of
the relevant member of the COTER Commission working
group. The work was coordinated by the CoR secretariat, with
a team of experts providing technical and organisational
assistance. Some essential points drawn from the questionnaire
were discussed, namely:

— the role of the regions and local authorities in framing
and implementing policies and programmes: subsidiarity
and co-responsibility;

— the added value of European cohesion policies:

the

Structural Funds and Community initiatives;

— governance in relation to the Structural Funds: responsi-

bility and monitoring;

— day-to-day management of the programmes.

A report of the focus groups’ work was submitted to the
COTER Commission. A summary of the views expressed in
the focus groups was also prepared by the two rapporteurs
and presented to the COTER Commission (on 19 February
2003) at a meeting also attended by representatives of the
European Commission and the Parliament.

2.3. Debate in the COTER working group

The working group is chaired by the two rapporteurs. The
15 members of the group are responsible for organising the
meeting of the focus group in their own country. A preliminary
meeting of the working group was held in Brussels on the

PART TWO — RESULTS OF THE SURVEY

As a basis for discussion, the following comments are consist-
ent with the Opinion of the Committee of the Regions on the
First Progress Report on Economic and Social Cohesion
(CdR 101/2002 fin), notably that ‘cohesion policy, as enshrined
in the Treaties,
is an instrument by which to achieve the
principles of solidarity, cooperation and redistribution and is a
cornerstone of integration of the EU’s peoples and territories’.
In that opinion the Committee also reaffirms ‘as a consequence
of applying the subsidiarity principle, ... the need for increased
and more effective involvement of Member States and regional
and local authorities in the framing of cohesion policies,
without this leading to a re-nationalisation of regional develop-
ment policies’.

When the analysis of the questionnaire’s findings refers to the
views of ‘the regions’, this should be understood to refer to all
those infra-state authorities (either regional authorities or,
where there are no regional government structures, the local
authorities representing the region) whose representatives took
part in the consultation exercise conducted by the Committee
of the Regions.

Before presenting the questionnaire’s findings it is important
to spell out the basic message they contain:

— The regions are calling for greater coherence with respect

to the Structural Funds:

a)

b)

internal coherence (between the Funds, between the
different departments of the European Commission,
and between the different departments of central
government);

external coherence (vertical and horizontal coordi-
nation between Community, national and regional
programmes).

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— The regions are also calling for better application of the
subsidiarity and proportionality principles: this means re-
establishing the original concept of subsidiarity, with due
respect for constitutional limits of each national system,
and considering whether the regions’ role should be set
out in the Treaty. As far as Structural Fund policy is
concerned, the regions represent the most efficient level
of government, and therefore subsidiarity in this policy
area must start at the regional level, especially since most
European regions have embarked, partly on the basis of
European programmes, on a learning process which
has enabled them to move towards integrated regional
development.

— A paradox seems to be emerging: improving the co-
herence and effectiveness of policies would tend to
strengthen the role of the European Commission, whereas
actual application of the subsidiarity principle means
powers and responsibilities being exercised by the most
efficient, grassroots level.

To resolve this apparent paradox, the Committee of the
Regions proposes a new model of governance for European
regional and cohesion policy, based on the general principles
and practical recommendations made in this report.

more directly involved in decisions taken by the Member State
with the Community authorities.

As far as participation in management and decision-making
bodies is concerned, it seems that although the regions are
critical of the remit and working methods of those bodies,
most
in annual meetings (over 75 % positive
responses), in the Member States where the regions have more
institutional powers.

take part

Involvement of the regions in the Structural Fund programmes
also seems to be based mainly on implementing programmes
within the Monitoring Committees, for which the regions
express strong support. However, there is a paradox here. The
work of the Monitoring Committees is appreciated because
they can have a positive impact on the process of regional
development by strengthening the role of the regional auth-
orities and partnerships in implementing an integrated devel-
opment policy and by enhancing consensus between develop-
ment players. However, the way the Monitoring Committees
currently work is criticised for focusing too much on regulatory
and technical issues. On the other hand, opinions are mixed
on the current consultative role of the Commission within the
Monitoring Committees.

The information gathered from the survey is set out below. It
is important here to bear in mind the heterogeneity of the EU
regions considered, in terms of institutional factors, legislative
powers and programming objectives.

I.2.

Internal coherence of Structural Fund policy at Community
level

I. Role of the regions in the governance of the structural

policies

I.1. How the regions participate in Structural Fund programming

and in management and decision-making bodies

Given that there are currently problems of coherence at
Community level between the policies pursued by each of the
Funds, as well as problems of coordination and of uniformity
of standards and operation between the Directorates-General,
exacerbated in some cases by practices in the Member States,
a very large majority of respondents are in favour of merging
the three Structural Funds into a single fund to ensure
coherence in structural policy, which by its nature is hori-
zontal.

The overwhelming majority of the regions consider themselves
to be involved in all stages of programming, mainly in drawing
up strategies and in the planning and implementation of
programmes.

Many regions point to problems in coordinating administrative
procedures for the three Funds in view of their specific
objectives and advocate maintaining flexible management
practices for each fund within a single structure.

However, the regions feel that they are less involved in the
process of deciding on programmes, particularly in the very
centralised Member States where regions have few institutional
powers. In those countries, the regions would also like to be

In general, it is felt that the way the three Funds are currently
coordinated does not work well in practice, and that there are
major problems with the current operation of the European
Social Fund (ESF), whose management methods are deemed
inefficient.

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The regions feel that the objectives of the Structural Funds
should be geared towards a regional and integrated approach
to development and prioritise the approach initiated with the
ERDF. The same approach should be adopted for the two
other funds,
the ESF and the EAGGF Guidance section,
especially the ESF. Some respondents rightly consider that
account must still be taken of the fact that non-eligible areas
also have training needs. All regions of the Community must
be covered by Objective 3, but ESF measures should be
managed regionally so as to be consistent with the horizontal
approach to regional development.

Aligning the objectives of the EAGGF Guidance section with
those of the ERDF poses fewer problems, given that their
objectives are very similar. In the interest of rural areas, many
respondents favour a single type of programming similar to
that of the ERDF.

It is also proposed that a programming approach based on a
regional strategic development platform should be preferred
to focusing on measures limited to a specific area within a
region.

The regions endorse the innovative character of Community
initiatives, but note that such initiatives are designed and
implemented without being directly linked to strategy and to
the priority measures of the structural programmes. This
results in a loss of efficiency and synergies. It also seems that
the administrative and financial cost-benefit ratio is better for
Community initiatives than for Mainstream Programmes.

Finally, the regions deplore the lack of coordination between
the Cohesion Fund and the other Structural Funds, as well as
the lack of a regional and territorial approach for the Cohesion
Fund.

I.3. Co-responsibility of the Commission, the Member States and
the regions, and the future role of the regions in cohesion policy
and the Structural Funds

The regions’ position on the future of co-responsibility is
almost unanimous and very clear. They consider it necessary
to apply effectively the principles of subsidiarity and pro-
portionality in co-responsibility relations between the Com-
mission, the Member State and the regions, while strengthening
the regional decision-making level.

Thus:

The regions must therefore be treated as direct partners
of the Commission on the same basis as the Member
States;

— regions must take the lead in defining a regional project
as the basis for a strategy for which instruments and
actors — regional, cross-border, national or transnational
— will be mobilised;

— regions must play a more active role in framing the new
regional policy after 2006 by helping to set priorities,
implement legislation, allocate resources and delegate
management and administration tasks. Co-responsibility
must not be one-sided and must be practised only when
there is an obligation to do so, as happens now. Co-
responsibility requires a contractual partnership between
the Commission,
the Member State and the region
concerned.

In this context, it is necessary to formally establish regional
responsibility as the driving force for operational implemen-
tation of all the Community programmes that affect a given
region and to clearly define the division of powers and
responsibilities between the three decision-making levels.

I.4. Application of the subsidiarity principle and its inclusion in

the Treaty

Under the Treaty, deciding how the subsidiarity principle is to
be applied is a prerogative of the national authorities, and
there is a strong correlation between the institutional structure
of a Member State and the way the subsidiarity principle is
applied there. The regions consider this situation unsatisfac-
tory; over half of them feel that they are not adequately
involved by their government
in implementing structural
policies in accordance with the subsidiarity principle. Regions
with strong institutional powers are amongst the most satis-
fied.

It is therefore necessary to confirm that a Europe of the regions
is recognised in the Community context and to emphasise the
need for a clear and unambiguous legal basis. The role of the
regions as stakeholders in Community cohesion policy must
be explicitly recognised and incorporated into the Treaty.

Various arguments are advanced for changing the substance
of the subsidiarity principle in the Treaty, and are worth
considering. We would summarise these as follows:

— the purpose of structural programmes is regional develop-
ment. In theory, according to the principle of subsidiarity,
the regional level and regional authorities should be the
most suitable decision-making and management level.

— A Europe of the regions must be recognised in the
Community context, which requires a clear and unam-
biguous legal basis. The role of the regions as stakeholders
in Community cohesion policy must be explicitly recog-
nised.

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— Proper application of the subsidiarity principle requires
that the Commission take action ‘only if and insofar as the
objectives of the proposed action cannot be sufficiently
achieved by the Member States and their regional and
local authorities and can therefore, by reason of the scale
or effects of the proposed action, be better achieved by
the Union’. The White Paper on European Governance
recognises local and regional authorities as key actors in
implementing Community law and policies, and the
European Commission plans to test the use of tripartite
agreements or contracts of objectives between the Com-
mission, a Member State and a regional or local authority.

I.5.

External coherence of Structural Fund policy

Most of the regions believe that there is substantial coherence
at regional
level between European, national and regional
programmes, and efforts have been stepped up recently to
ensure coherence between regional, national and Community
strategies and issues. This should continue.

Given their importance, it is felt that coherence is necessary
above all at the programming and implementation stages.

— Since structural policies are intended to promote regional
development, the regions are not just the most appropri-
ate decision-making level, but also the most effective
implementing level, because they work closely with local
players on policies they apply in their own territory.

— The subsidiarity principle should restore the balance
between the most effective decision-making level and the
concern to ensure that policy implementation is close to
ordinary people.

— The regions are better able to identify the priority areas
of regional development than other decision-making
levels.

— This does not mean neglecting the role of the Member
State: under the subsidiarity principle, central govern-
ments should play a coordinating and unifying role
between the Commission and the regions while respecting
the powers of both.

— The regions with strong institutional powers base their
support
for the subsidiarity clause referring only to
regions on the argument that the local level is too small,
except in the case of large cities, and not appropriate
for implementing an integrated development policy,
although local authorities must be involved when their
interests are affected in the context of a partner-
ship. Regional authorities are close enough to local
situations, and at the same time they are sufficiently
distanced to better weigh the different interests of the
local authorities concerned.

— Regions in highly decentralised countries consider that
their role should be strengthened and that it would be
preferable for that role to be explicitly recognised in the
Treaty.

I.6. Added value which EU programmes contribute to regional

development

The regions all recognise the added value of Structural Fund
measures. This added value does not relate to funding alone,
although funding is considered of prime importance, but
rather to the ‘Community method’.

Community added value relates above all to the content of
regional strategy and secondly to the design of programmes.
Next in importance are the effects on management of pro-
grammes. However, the impact of Community measures on
the implementation of public-private partnerships does not
seem to be crucial.

II. Management of programmes and monitoring

II.1.1. O r g a n i s a t i o n a l m a n a g e m e n t o f p r o -
a c h i e v e
t h e C o m -

r e q u i r e m e n t
c h e c k s

a n d

b y

t o

g r a m m e s :
r e s u l t s ,
m i s s i o n

The regions consider that it is more difficult for the Com-
mission, as the guarantor of cohesion policy, to play its role
in maintaining the strategic coherence of projects than in
monitoring the budgetary implementation of programmes.
These observations must be seen in the context of the
operation of the annual meetings and Monitoring Committees
and the respective roles played in them by the various players.

As we have seen, opinion is divided on whether the Com-
mission should have a purely consultative role in the Monitor-
ing Committees. Whilst a majority are happy with this
situation, others feel that the Commission should be a full
partner in programme management, provided application of
the subsidiarity principle is reviewed.

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There is virtually unanimous agreement that the monitoring
requirements which Member States have to meet under
Regulation No 438/2001/EC are too strict and that they are
unclear. On the other hand, application of these requirements
is considered to be relatively effective.

The effectiveness of these evaluations is recognised with regard
to current revision of the programmes, mid-term changes and
future revisions. They are considered to be effective in
part with respect to designing programmes,
implementing
programmes and project selection (in that order of import-
ance).

With regard to the audits carried out by the Commission and
the Court of Auditors, the balance of opinion is definitely that
they are sufficient in number and administratively cumber-
some. Their effectiveness is not in doubt: most respondents
state that they are fully or at least partly effective. Criticism
focuses mainly on the lack of clear monitoring standards and
poor coordination with national and regional monitoring
systems.

II.1.2. O r g a n i s a t i o n a l m a n a g e m e n t o f p r o -
d a y - t o - d a y m a n a g e m e n t

g r a m m e s :
a n d m o n i t o r i n g

Opinion is very divided regarding the effectiveness of ex-post
evaluations in measuring the impact of programmes on the
development of a region. The regions express a strong desire
to be involved in the evaluations, in order to ensure that more
account is taken of specific local contexts when measuring the
programmes’ impact.

Most regions consider that they have been involved in ex ante
and ongoing evaluations. A large majority also feel that the
Commission should be more involved in these evaluations.

The day-to-day management and monitoring of programmes
represent key roles for the regions in Structural Fund policy
because almost all regions in the Community are directly
involved in operational management of the programmes.

II.2.1.

F i n a n c i a l
g r a m m e s :
n a t i o n a l
C o m m u n i t y f i n a n c i a l s y s t e m s

m a n a g e m e n t
c o m p a t i b i l i t y

( i n c l u d i n g

o f

r e g i o n a l )

p r o -
b e t w e e n
a n d

With respect to day-to-day management, the regions consider
coordination between project operators and management
authorities to be a crucial aspect of the day-to-day management
of structural programmes, but this sphere also presents the
biggest difficulties. Generally speaking, programming inad-
equacies are most noticeable at the level of coordination with
those running the projects, given the gap between local
conditions, the concern to achieve coherence and the regulat-
ory and institutional framework that determines how program-
ming works. These inadequacies relate for instance to delays
in decision-making and to the effectiveness of programmes
and projects, criteria and procedures for selecting projects, and
the difficulty of developing innovative projects etc.

For all regions the main problems in follow-up monitoring of
project implementation concern the interpretation of Com-
munity rules and lack of clear instructions for monitoring.

National and Community financial systems are considered to
be rather incompatible, resulting in substantial problems.

these incompatibilities can be
A large majority feel that
overcome. However, at this level, the specific features of the
national systems and the differences between them affect the
capacity to simplify them. A country-by-country approach is
necessary here, but the ideal solution would be to have a single
reference framework at European Union level.

II.2.2.

F i n a n c i a l
g r a m m e s :
m e t h o d s

m a n a g e m e n t
C o m m u n i t y

p r o -
o f
f i n a n c i n g

These problems in interpreting rules relate to financial matters,
in three main areas: eligibility of expenditure, control of
expenditure and financial management rules (in that order of
importance).

Opinion is also divided on the cofinancing mechanism and
application of the additionality principle, again with two broad
views: on the one hand, a feeling that the mechanism is
satisfactory and, on the other, that it is only partially satisfac-
tory. Specific national situations come into play here.

II.1.3. O r g a n i s a t i o n a l m a n a g e m e n t o f p r o -

g r a m m e s : e v a l u a t i o n s

The principle of the programme evaluations is not called into
question, but opinion is very divided as to how effective they
are. However, the commonest view is that they are effective
either fully or in part.

There is almost universal opposition to cofinancing by the N+2
rule (Article 31(2): automatic decommitment). The regions feel
that this mechanism does not take sufficient account of
the time needed for efficient management of programmes,
especially at the end of the funding period; that it causes
considerable problems in the routine management of pro-
grammes; and that it excludes innovative or groundbreaking
practices or projects. The vast majority of regions think that
this rule should be changed.

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Finally, a small majority of regions are satisfied with the rule
on repayment of the payment on account after an 18-month
time limit (date of decision + 18 months) (Article 32(2)). Other
regions suggest changing it to ‘date of decision + 30 months’.

demonstrates the need for a Community policy to stabilise —
and then reduce — those disparities that national policies are
unable to eliminate.

PART THREE — TOWARDS A NEW MODEL OF
GOVERNANCE IN COHESION POLICY: PROPOSALS
AND RECOMMENDATIONS

We interpret the strong interest shown by the regions in this
report and the basic messages contained in the findings
obtained as a call for the introduction of a new model of
governance in European cohesion policy, within which the
emergence of the regions as key players acting as anchors
and centres of gravity for integrated regional development
strategies must be recognised as a major factor.

This new model must be systematically developed on the basis
of concepts such as subsidiarity, co-responsibility,
internal
and external coherence, flexibility, procedural simplification,
additionality and partnership.

The new model of governance for cohesion policy should be
based on five principles.

1st principle: cohesion policy must remain a Community policy.

Cohesion policy is a policy of solidarity towards regions with
structural or specific problems, designed to let them take full
advantage of the EU and to implement Europe’s major political
objectives of balanced development, competitiveness and
growth.

To achieve this it is therefore essential to determine common
guidelines in order to promote convergence between the
regions benefiting from cohesion policy.

Otherwise the European Union would become no more than
a ‘cash dispenser’ where everybody could go and collect their
dues to pursue their own policy. Obviously there is a risk that
this approach will
increase disparities between the richest
and poorest regions, interrupt the continuity of long-term
programmes and allow Member States to divert resources
allocated for helping disadvantaged regions to other uses.

Finally, the Community character of economic and social
cohesion policy is also justified by the persistence of substantial
regional disparities within the current Member States, which

‘Renationalisation’ would therefore represent a step back for
European policy as a whole and would aggravate regional
disparities within the EU.

2nd principle: a future cohesion policy with reduced resources
is inconceivable.

The added value of Community policies is indisputable.
Moreover, enlargement will increase the need for economic
and social cohesion in the EU. The resources currently allocated
for cohesion policy must be regarded as a minimum baseline.
Any questioning of the 0.45 % of EU GDP target for cohesion
policy would undermine the policy’s meaning and credibility.
It is necessary to ensure that the impact of enlargement does
not harm the regions with slower development, which still
need support, or regions hit by the so-called statistical effect.
Such an approach does not imply that there is no need for
reform. But reform must also be designed to enhance the
impact of structural policy in favour of all the other regions
experiencing structural problems.

This also means that cohesion policy must be fair and must
take into account the absorption capacity of the beneficiary
regions. To be able to further strengthen these factors that
provide Community added value, an equitable distribution of
resources must be ensured between Europe’s regions and each
must be allowed to use all the resources allocated to it. This
principle must be observed by maintaining the current limit
on resources allocated to the Structural Funds (4 % of Member
States’ GDP).

3rd principle: sectoral policies must contribute to cohesion
policy.

The goal of regional development must not be pursued
through cohesion policy alone. The goal of cohesion, which is
is
an expression of solidarity between Europe’s regions,
relevant to all European policies (transport, environment,
research, CAP, competition, etc.).

Because of the spatial impact of farming and forestry, the CAP
is particularly relevant among these sectoral policies; the final
form of the CAP will determine whether rural areas are given
a new impetus or whether, at least in the case of the weaker
areas, they turn into desert, with the resulting disturbance of
the rural/urban territorial balance in the affected areas.

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However, it is necessary to identify the instruments and means
by which each Community policy contributes to cohesion
policy.

Thus a close link must be ensured between competition policy
and economic and social cohesion policy. State aids should
still be granted in order to make allowance for differences in
development between the regions or local or subregional areas,
in line with the provisions of the Treaty relating to competition.

In this context there must surely be a geographical link and
similarity in approach for regions receiving support from the
Structural Funds and areas designated eligible for regional aid.

5th principle: regional policy in the context of economic and
social cohesion must be very flexible owing to the different
regional situations: different institutional powers, geographical
differences (especially in the case of the new Member States)
and different objectives.

Rules should therefore only lay down general principles, which
will require uniform application and a transparent, coherent
and stable legal framework. Application rules should be linked
to specific conditions in the Member States on the basis of co-
regulation and the approach of tripartite (or bipartite (1))
contracts. It should then be possible to organise the national
and regional levels of governance in such a way as to be
coherent with the situation of the Member State. This could be
applied most immediately with respect to audits, financial
management, eligibility of spending and the process of design-
ing and managing programmes.

4th principle: cohesion policy must be based on a regional
approach and genuine application of the subsidiarity and
proportionality principles.

These five principles, which can be used as a basis for
simplifying and at the same time strengthening and stream-
lining cohesion policy, can be broken down into the following
recommendations:

Enlargement will require more targeting of resources where
they are felt to be needed and will prompt calls for greater
efficiency in the use of the Structural Funds.

One way of ensuring such targeting and efficiency is to
emphasise the regional approach to granting resources, on the
basis of clear criteria and in relation to EU political objectives.

The Commission reports show that regional situations in each
Member State are often characterised by disparities that are
not reflected by using national criteria as a basis for assessment.
This problem can be overcome by basing all allocations on
regional criteria.

Regional authorities, in partnership with local authorities, are
also the best placed to decide on the projects, objectives and
location of Community action, while strictly respecting the
subsidiarity principle. Both as an allocation criterion and as a
method for implementing programmes, this regional approach
is a guarantee of good governance and effectiveness.

The principles of subsidiarity and proportionality are intended
to give greater legitimacy to the European Commission’s role
as guarantor of the ‘Community method’ and of general
principles, rather than its role in monitoring procedures. The
regional level should also be incorporated into the institutional
framework of the subsidiarity principle and Treaty Article 5
should be amended, which means that Article 274 should also
be revised.

Recommendation 1: Simplifying procedures: coherence of the
Structural Funds

The key points are: flexibility of rules, a regional approach (2),
evaluation of results (rather than monitoring of procedures),
merging of funds (with differentiation of models according to
context) and emphasising the essential purpose of Community
initiatives.

Recommendation 2: Strengthening the concept of co-responsi-
bility: taking action at the most efficient level

It makes sense to envisage using tripartite contracts (3) and
taking more account of the key role played by regions as
managers of their territorial development strategy, which
would imply a genuine decentralisation of responsibilities.
This approach should be adopted for simplifying audits, for
example.

Recommendation 3: European added value: coherence of objec-
tives

Coherence of objectives is the main added value of the
European Union in cohesion policy. Only a European insti-
tutional framework can guarantee complementarity of sectoral
policies, financial instruments and procedures to be followed
to achieve the objective of cohesion, and a fair balance between
solidarity and competitiveness.

(1) Bipartite contracts between the Commission and the region in the
case of regions with exclusive powers in the area concerned.

(2) See point I.3, second indent, p. 11.
(3) Or bipartite contracts, see previous footnote.

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Recommendation 4: The future of regional cooperation as an
instrument of integration

Strengthening the cohesion policies requires that more use be
made of regional cooperation as an instrument, both within
the frontiers of the Union and to support the integration
process of the accession countries.

OPERATIONAL PROPOSALS

The following proposals are formulated at a more operational
level on the basis of the above five principles and four
recommendations.

mission and the Member State in the Community context
means that it has not been achieved. This situation is all the
more inconsistent with the fact that most of the regions carry
broad implementing responsibilities in the management of
programmes.

The regions must be fully involved in all decisions at every
stage of the decision-making process.

In the Member States whose legal systems or constitution do
not permit such participation, the regional authorities, or,
where there are no regional government structures, the local
authorities representing the region, must be involved as
priority partners, for instance during the programming and
monitoring phases. Tripartite contracts are the most appropri-
ate solution here.

I. Role of the regions in the governance of the structural

policies

I.2.2.

P a r t i c i p a t i o n o f
i n t h e
t h e
d e c i s i o n - m a k i n g b o d i e s o f S t r u c t u r a l
F u n d p r o g r a m m i n g

r e g i o n s

I.1. Application of the subsidiarity principle and its inclusion in

the Treaty

We propose that the subsidiarity principle be applied as it was
originally conceived, i.e. to mean action being taken and re-
sponsibility exercised at the local, regional, national and Com-
munity levels in accordance with their respective capacities.
This means amending the Treaty to insert an explicit reference
to regional and local government in the article on subsidiarity.

I.2.1.

I n v o l v e m e n t o f
t u r a l F u n d p o l i c y

t h e r e g i o n s i n S t r u c -

Involvement of the regions, drawing on their partnerships
with local authorities, in every phase of the Structural Fund
management process (programming, negotiation, follow-up
— annual meetings and Monitoring Committees — implemen-
tation and evaluation) must be considered an essential aspect
of taking regional problems into account in Structural Fund
policy. On the one hand, the fact of having a single program-
ming document covering the whole programming period for
all the Structural Fund programmes enhances the legitimacy
of a specific regional policy as an integrated whole. On the
other hand, the Commission’s definition of guidelines and
priorities for a whole programming period is a valuable
indication of the approach the regions should adopt in
accordance not only with specific regional circumstances, but
also with a Community approach to cohesion policy objec-
tives, while showing greater
to
implementation in view of regional factors not fully appreci-
ated by the Commission.

flexibility with respect

Involving the regions in the decision-making process is a key
aspect of the process of involving them in Structural Fund
programming. It is therefore important to review the terms of
this involvement, since the general rule linking the Com-

The annual meetings should have three objectives:

— to address basic questions relating to the coherence of
the programmes implemented in connection with the
strategies and imperatives of territorial cohesion and
coordination between the Funds;

— to be a forum for tripartite discussion and consultation
with the aim of finding joint solutions to the general
problems posed by development of the programmes, not
just a technical forum;

— to develop more professionalism in the way the meetings
are run: agenda, preparing the decisions to be taken,
identifying strategic issues, etc.

Since they are responsible for operational management of the
programmes, the regions must attend the annual meetings so
that the regional and local implications of the programmes
can be better highlighted in relation to their general objectives.

The regional authorities of the more centralised countries, or,
where there are no regional government structures, the local
authorities representing the region, should be involved so that
they can better understand the requests and recommendations
of the Commission. By the same token, it is equally necessary
for a representative of the subregional authorities to partici-
pate.

Since the work of the Monitoring Committee ties in more with
the annual meetings and with the work of the authorities
responsible and the Commission, it should be a body that
discusses problems of substance and not just financial issues,
and which ensures coherence between projects and the
strategies of the programmes. It should be granted more
powers, greater decision-making responsibility and more
autonomy to this end.

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C 256/11

I.2.3.

P r o g r a m m i n g d o c u m e n t s o f t h e S t r u c -
t u r a l F u n d s

Programming documents must be simple and modifiable. The
programming document can be adjusted on a more or less
ongoing (step-by-step) basis after the mid-term review, using
simple and relevant indicators. In this context the programme
complement must become a flexible instrument used solely to
manage the programme while it is running.

Community measures in order to develop a regional Com-
munity policy. It would allow synergies and complementarities
to be identified between the funds, as well as facilitating
management and coordination tasks.

The CoR also proposes that clear rules be introduced for
eligible expenditure and that
the European Commission
respond to requests clearly and swiftly in order to facilitate
day-to-day management.

I.3.

Internal coherence and content of Structural Fund policy at
Community level

In this context and in the light of the information provided by
the four key tools used for the consultation, it seems necessary
to pursue three inseparable priority objectives after 2006:

Our proposals concern the near future and the period after
2006.

In the short term we think it is necessary to try and improve
coordination between the Structural Funds at Community
level. To this end an internal system should be set up in the
Commission to coordinate measures supported by the three
funds, as happens at regional level in many countries. We also
suggest strengthening the coordinating role of the REGIO DG
in relation to the other DGs concerned.

This coordination should at least involve harmonising the
working rules of the different funds. The technicality of the
rules governing each of the funds very often means that
the initiating departments and departments responsible for
implementing the SPDs tend to specialise in one fund, which
often leads to a lack of overview over the Structural Fund
measures both within a single programme and between
In
different programmes implemented in a given region.
addition, the existence of several funds governed by different
rules impedes the integrated approach desired at project level.

The aim should be to have an identical financial regulation
and general regulation for the three funds. In this connection
we suggest that a single system of management rules be
introduced for all the funds, both at the financial management
level (e.g. disbursements or requests for reimbursement) and
with respect to monitoring operational aspects of the pro-
grammes (e.g. reports, evaluations).

In this context it would have to be ensured that the corpus of
rules governing all the Structural Funds did not amount to just
the sum of the individual sets of rules governing the current
funds, but that there was a streamlining on the basis of the
lowest common denominator.

— closing the regional development gap: this key policy
would concern regions with a GDP per capita of less
than 75 % of the EU average, maintaining the current
Objective 1 definition, with particular focus on those
regions that have experienced an artificial fall in this
average owing to enlargement. Special attention should
also continue to be given to all the outermost regions
and particularly sparsely populated regions in accordance
with Treaty Article 299(2);

— endeavouring to achieve economic and social restructur-
ing of the regions with development problems: this policy
would cover current Objectives 2 and 3 on the basis of
objective criteria relating to employment and unemploy-
ment rates by region. The regions, in partnership with
local authorities, could then decide whether to allocate
funds received to all or part of their territory, with a level
of aid per inhabitant requirement, in order to implement
the Community geographical (urban, industrial and rural
areas) and thematic (employment, training, environment,
natural risks, etc.) guidelines adopted;

— and finally, maintaining the innovative character of
Community initiatives and on this basis seeking and
stepping up regional cooperation (cross-border, trans-
national and interregional); efforts should be made to
adapt these initiatives better to overall regional develop-
ment strategy but without reducing their autonomy in
relation to the SPD.

I.4. Co-responsibility of the Commission, the Member States and
the regions, and the future role of the regions in cohesion policy
and the Structural Funds

Looking beyond 2006, we propose that ‘mono-fund’ pro-
grammes be introduced and that the Structural Funds be
merged to form a single fund. This solution is recommended
as the most coherent way of integrating and coordinating

Again,
the aim is to apply effectively the principles of
subsidiarity and proportionality in co-responsibility relations
between the Commission, a given Member State and the
regions, while strengthening the regional decision-making
level.

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In this context, it is necessary to formally establish regional
responsibility as the basis for operational implementation of
all the Community programmes that affect a given region and
to define clearly the division of powers and responsibilities
between the three decision-making levels.

This means, for instance, establishing effective co-management
rules between the various regional, national and Community
partners, e.g. on the basis of tripartite contracts between the
Commission, the Member State concerned and the regions. At
a more practical level it is also necessary to establish a more
direct relationship between the Commission and the regions.
As already noted, the tripartite (1) contracts (confidence pact,
responsibility pact, etc.) are identified as methods for achieving
this, which will allow general rules to be drawn up for specific
national contexts.

I.5.

External coherence of Structural Fund policy

For the longer term it is necessary to better define the
nature of the future link between the national and regional
programmes on the one hand and Community programmes
on the other, in order to determine whether or not the former
should be included in the programming design phase, whether
their timing should be coordinated with the implementation
of Community programmes and whether uniform rules should
be applied in order to integrate them.

Flexibility should be the watchword in seeking coherence
between the three types of programme and there will not
necessarily be a need to introduce rigid, standard rules for each
type.

II. Management of programmes and monitoring

II.1.1. O r g a n i s a t i o n a l m a n a g e m e n t o f p r o -
a c h i e v e
t h e C o m -

r e q u i r e m e n t
c h e c k s

a n d

b y

t o

g r a m m e s :
r e s u l t s ,
m i s s i o n

Audits should be carried out by the European Commission
mainly during the second phase of the programming period,
depending on the results obtained during the first phase.

Finally, the purpose of audits must be to check whether
expenditure is eligible and whether Community rules have
been observed, avoiding verification of implementation pro-
cedures provided for in the programming complement (selec-
tion criteria, etc.).

II.1.2. O r g a n i s a t i o n a l m a n a g e m e n t o f p r o -
d a y - t o - d a y m a n a g e m e n t

g r a m m e s :
a n d m o n i t o r i n g

In these areas there should be greater recognition of the role
played by regional and local authorities in implementing
Structural Fund measures and more emphasis on the need for
contracts or agreements between the Commission, the Member
State concerned and the regions.

At the same time an attempt should be made to define clear
and simple management rules and to establish an effective
management and coordination system for all the Funds and all
the programmes at regional level.

Simplifying the rules in this way must bring about a balance
between guaranteeing transparent management and efficiency
of the Funds on the one hand and providing a flexible
management structure for those in charge of the programmes
and operators on the other.

Finally, better information should be provided for project
operators.

In trying to achieve strategic coherence between the pro-
grammes, a modus operandi must be developed that enables
the Commission to discharge its responsibilities towards
Parliament
in terms of ensuring coherence between the
cohesion objectives at Community level and the programmes.
To this end the Commission must be able to assess the strong
points of a region and the resulting projects and to relate these
to cohesion policy as a whole.

With respect to the application of Regulation 438/2001 and
the audits of the Commission and the Court of Auditors,
guidelines and clear rules must be drawn up governing audits
and in each context a simple and effective modus operandi
must be identified, avoiding any overlap of audits and auditors.

(1) Or bipartite, see point I.3, second indent, p. 11.

II.1.3. O r g a n i s a t i o n a l m a n a g e m e n t o f p r o -

g r a m m e s : e v a l u a t i o n s

Ex-post evaluations are too late to be taken into account in the
next programming period. A less cumbersome method must
be found so that lessons can be drawn from the current
programming period more quickly with a view to 2006. One
solution would be to combine evaluation of the final report
with an ex-ante evaluation of the next programming period.

Similarly, more account should be taken of the results of
previous programming periods when drawing up program-
ming documents, and the aims of the ex-post evaluation
should be better defined in general. This should be the basis
for a global evaluation of the impact on a region of all
Community measures over the long term and be carried out
in close collaboration with the regions.

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II.2.1.

F i n a n c i a l
g r a m m e s :
n a t i o n a l
C o m m u n i t y f i n a n c i a l s y s t e m s

m a n a g e m e n t
c o m p a t i b i l i t y

( i n c l u d i n g

o f

r e g i o n a l )

p r o -
b e t w e e n
a n d

Simplification could be achieved by creating a single legal
framework and setting up a single regional fund to provide
Community financial assistance that would no longer pass via
the budget of the Member State. This solution is being put into
practice in certain countries, but it is too early to assess
whether it is really effective.

II.2.2.

F i n a n c i a l
g r a m m e s :
m e t h o d s

m a n a g e m e n t
C o m m u n i t y

o f
p r o -
f i n a n c i n g

The N+2 rule should be amended, since its application may
hamper the implementation of large-scale projects, is time-
consuming and induces management authorities to favour less
structured projects that absorb the available funding more
rapidly. An N+36 months rule, dating from approval of the
programming document, would overcome these problems
while maintaining the restrictive nature of the rule.

Payment application procedures should also be harmonised
and made more flexible.

By analogy, the rule on repayment of the payment on account
must be adapted on the basis of an N+30 months formula.

Brussels, 2 July 2003.

The President

of the Committee of the Regions

Albert BORE

Opinion of the Committee of the Regions on the ‘Communication from the Commission “Second
progress report on economic and social cohesion”’

(2003/C 256/02)

THE COMMITTEE OF THE REGIONS,

having regard to the Communication from the Commission — Second progress report on economic and
social cohesion (COM(2003) 34 final);

having regard to the European Commission of 30 January 2003 to request its opinion on this subject
under Article 265(1) of the Treaty establishing the European Community;

having regard to its Bureau’s decision of 11 February 2003, to entrust the Commission for Territorial
Cohesion Policy with the task of drawing up the relevant opinion;

having regard to its opinion on The structure and goals of European regional policy in the context of
enlargement and globalisation: opening of the debate (CdR 157/2000 fin) (1);

having regard to its opinion on the Communication from the Commission — Second Report on
Economic and Social Cohesion (CdR 74/2001 fin) (2);

having regard to its opinion on the Communication from the Commission — First Progress Report on
Economic and Social Cohesion (CdR 101/2002 fin) (3);

(1) OJ C 148, 18.5.2001, p. 25.
(2) OJ C 107, 3.5.2002, p. 27.
(3) OJ C 66, 19.3.2003, p. 11.