COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE, THE COMMITTEE OF THE REGIONS AND THE EUROPEAN INVESTMENT BANK Conclusions of the fifth report on economic, social and territorial cohesion: the future of cohesion policy
Date: 2010-11-09
Institutions: European Commission
Subjects: economic and social cohesion, economic growth, economic recession, employment policy, job creation, knowledge economy, management of resources, stability pact

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EUROPEAN COMMISSION 

Brussels, 9.11.2010 
COM(2010) 642 final 

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

Conclusions of the fifth report on economic, social and territorial cohesion: the future of 
cohesion policy 

{SEC(2010) 1348 final} 

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

Conclusions of the fifth report on economic, social and territorial cohesion: the future of 
cohesion policy 

1. 

INTRODUCTION 

Europe faces a daunting task. It must exit from a deep crisis and reduce unemployment and 
poverty,  while  switching  to  a  low-carbon  economy.  Such  an  ambitious  task  requires  swift 
action  on  many  fronts,  which  is  why  the  European  Council  adopted  the  Europe  2020 
Strategy1.  For  Europe  to  succeed,  European,  national,  regional  and  local  levels  all  need  to 
play their part. Cohesion policy should continue to play a critical role in these difficult times, 
in  order  to  deliver  smart,  sustainable  and  inclusive  growth,  while  promoting  harmonious 
development of the Union and its regions by reducing regional disparities. 

Cohesion  policy  has  made  a  significant  contribution  to  spreading  growth  and  prosperity 
across the Union, while reducing economic, social and territorial disparities. The fifth report 
on  economic,  social  and  territorial  cohesion  shows  that  the  policy  has  created  new  jobs, 
increased human capital, built critical infrastructure and improved environmental protection, 
especially  in  the  less  developed  regions.  Undoubtedly,  without  cohesion  policy,  disparities 
would be greater. Yet the lasting social effects of the crisis, the demand for innovation arising 
from increased global challenges and the imperative to make the most of every euro of public 
expenditure call for an ambitious reform of the policy. 

As  indicated  in  the  EU  budget  review2,  in  particular  progress  needs  to  be  made  in  the 
following  key  areas:  concentrating  resources  on  the  Europe  2020  objectives  and  targets; 
committing Member States to implementing the reforms needed for the policy to be effective; 
and improving the effectiveness of the policy with an increased focus on results. The explicit 
linkage of cohesion policy and Europe 2020 provides a real opportunity: to continue helping 
the poorer regions of the EU catch up, to facilitate coordination between EU policies, and to 
develop  cohesion  policy  into  a  leading  enabler  of  growth,  also  in  qualitative  terms,  for  the 
whole of the EU, while addressing societal challenges such as ageing and climate change. 

With these conclusions, the Commission opens a public consultation on the future of cohesion 
policy. This is organised around a series of questions on the main ideas for its reform. 

The  following  sections  look,  in  turn,  at  how  the  policy  can  be  made  more  effective  and  its 
impact improved so as to enhance the European added value (Section 2), at how governance 
of  the  policy  can  be  further  strengthened  (Section  3),  at  how  the  delivery  system  can  be 
streamlined and made simpler (Section 4) and at the architecture of the policy (Section 5). 

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2 

‘Europe 2020: A strategy for smart, sustainable and inclusive growth’ - COM(2010) 2020, 3.3.2010. 
‘The EU Budget Review’ - COM(2010) 700, 19.10.2010. 

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2. 

ENHANCING THE EUROPEAN ADDED VALUE OF COHESION POLICY 

The added value of cohesion policy is recurrently debated by policy-makers, academics and 
stakeholders.  Some  argue  that  cohesion  policy  is  loosely  linked  to  EU  priorities,  that  it 
spreads  resources  too  thinly  across  policy  areas  and  that  its  impact  is  often  difficult  to 
measure.  Though  the  report  shows  that  cohesion  policy  has  contributed  to  economic  and 
social  development  of  regions  and  to  the  well-being  of  people,  the  Commission  takes  these 
criticisms very seriously. 

Further  reforms  of  cohesion  policy,  while  preserving  its  overall  objective,  should  therefore 
aim  to  steer  the  policy  decisively  towards  results  and  enact  the  reforms  needed  in  order  to 
achieve results, while cutting red-tape and simplifying the daily management of the policy. 

2.1. 

Reinforcing strategic programming 

Cohesion policy has already been substantially aligned with the Lisbon Strategy, in particular 
by  earmarking  financial  resources.  However,  this  alignment  is  not  sufficient  due  to  a 
governance gap between the two strategic processes. More can be done in the future to further 
alignment of cohesion policy with the Europe 2020 Strategy. This requires, first of all, clear 
guidance at European level and a more strategic negotiating process and follow-up. 

The  EU  budget  review  outlined  a  new  strategic  programming  approach  for  cohesion  policy 
with a view to closer integration of EU policies to deliver the Europe 2020 Strategy and the 
Integrated Guidelines. This approach would consist of:  

–  a common strategic framework (CSF) adopted by the Commission translating the targets 
and objectives of Europe 2020 into investment priorities. The framework would cover the 
Cohesion Fund, the European Regional Development Fund, the European Social Fund, the 
European Agricultural Fund for Rural Development and the European Fisheries Fund;  

–  a  development  and  investment  partnership  contract  which,  based  on  the  common 
strategic framework, would set out the investment priorities, the allocation of national and 
EU resources between priority areas and programmes, the agreed conditionalities, and the 
targets  to  be  achieved.  This  contract  would  cover  cohesion  policy.  In  order  to  promote 
economic, social and territorial cohesion in a coherent and integrated manner, it might be 
useful to extend its scope to other policies and EU funding instruments. The contract will 
be  the  fruit  of  the  discussions  between  Member  States  and  the  Commission  on  the 
development  strategy  presented  in  their  National  Reform  Programmes.  It  would  also 
describe the coordination between EU funds at national level; and  

–  operational  programmes  (OPs)  which,  as  in  the  current  period,  would  be  the  main 
management  tool  and  would  translate  the  strategic  documents  into  concrete  investment 
priorities accompanied by clear and measurable targets — which should contribute to reach 
the national targets set in the framework of Europe 2020.  

The timing of the annual reports monitoring progress towards the targets would be aligned 
with  the  Europe  2020  governance  cycle.  On  this  basis,  a  regular  political  debate  in  the 
relevant  Council  formations  and  European  Parliament  committees  would 
improve 
transparency, accountability and assessment of the effects of cohesion policy.  

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Three  proposals  in  the  EU  budget  review  have  a  particular  impact  on  cohesion  policy: 
concentrating  financial  resources,  the  system  of  conditionality  and  incentives,  and  focus  on 
results. 

2.2. 

Increasing thematic concentration 

The ex-post evaluations of cohesion policy concluded that greater concentration of resources 
is required to build up a critical mass and make a tangible impact. 

In  the  future  it  will  therefore  be  necessary  to  ensure  that  Member  States  and  regions 
concentrate  EU  and  national  resources  on  a  small  number  of  priorities  responding  to  the 
specific  challenges  that  they  face.  This  could  be  achieved  by  establishing,  in  the  cohesion 
policy  regulations,  a  list  of  thematic  priorities linked  to  the  priorities,  Integrated  Guidelines 
and flagship initiatives of Europe 2020.  

Depending on the amount of EU funding involved, countries and regions would be required to 
focus  on  more  or  fewer  priorities.  Thus,  Member  States  and  regions  receiving  less  funding 
would be required to allocate the entire financial allocation available to two or three priorities, 
whereas those receiving more financial support may select more. Certain priorities would be 
obligatory.  

At  the  same  time,  thematic  concentration  should  not  prevent  Member  States  and  regions  to 
experiment and fund innovative projects. Ring-fencing expenditure for specific target groups 
or experimental approaches (e.g. local development) might also be considered, possibly in the 
form of global grants.  

2.3. 

Strengthening performance through conditionality and incentives  

The  financial  and  economic  crisis  has  already  compelled  the  Commission  to  propose 
measures to improve the economic governance of the Union3. Sound macroeconomic policies, 
a  favourable  microeconomic  environment  and  strong 
institutional  frameworks  are 
preconditions  for  creating  jobs,  stimulate  growth,  reduce  social  exclusion  and  bring  about 
structural changes.  

This is even truer of cohesion policy, since its effectiveness largely depends on the economic 
environment  in  which  it  operates.  It  is  therefore  possible  to  strengthen  the  links  between 
cohesion policy and the economic policy framework of the Union. 

First,  to  support  the  new  economic  governance  system  new  conditionality  provisions  would 
be introduced creating incentives for reforms. Member States would be required to introduce 
the reforms needed to ensure effective use of financial resources in the areas directly linked to 
cohesion  policy,  for  example  environmental  protection,  flexicurity  policies,  education  or 
research and innovation.  

For  each  thematic  priority  the  CSF  would  establish  the  key  principles  which  interventions 
should  follow.  These  principles  must  leave  room  for  adaptation  to  national  and  regional 
contexts. Their main purpose would be to help countries and regions to tackle the problems 
that  past  experience  has  shown  to  be  particularly  relevant  to  policy  implementation.  These 

3 

‘Enhancing  economic  policy  coordination  for  stability,  growth  and  jobs  —  Tools  for  stronger  EU 
economic governance’ - COM(2010) 367. 

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principles  could  be  linked  to,  for  example,  transposition  of  specific  EU  legislation,  the 
financing of strategic EU projects, or administrative, evaluation and institutional capacity.  

On  this  basis,  specific  binding  conditionality  in  the  areas  directly  linked  to  cohesion  policy 
would  be  agreed  with  each  Member  State  and/or  region  —  depending  on  the  institutional 
context — at the beginning of the programming cycle in the programming documents (i.e. the 
development  and  investment  partnership  contracts  and  the  operational  programmes),  in  a 
coordinated  approach  with  all  relevant  EU  policies.  Their fulfilment  could  be  a  prerequisite 
for disbursing cohesion resources either at the beginning of the programming period or during 
a review in which the Commission would assess progress towards completing agreed reforms. 

Achievement of institutional reform is critical to underpin structural adjustment, foster growth 
and  jobs  and  reduce  social  exclusion,  notably  by  reducing  regulatory  and  administrative 
burdens  on  businesses  or  by  improving  public  services.  As  now,  these  would  be 
complemented  by  support  under  cohesion  policy  to  develop  administrative  and  institutional 
capacity  and  effective  governance.  This  should  be  available  to  every  Member  State  and 
region.  

Second, financial sanctions and incentives linked to the Stability and Growth Pact have been 
so far limited to the Cohesion Fund. The Commission has proposed to extend it to the rest of 
the  EU  budget  as  complementary  leverage  to  ensure  the  respect  of  key  macro  economic 
conditions in the context of the corrective arm of the Pact. In cases of non-compliance with 
the rules of the Pact, incentives should be created by suspending or cancelling part of current 
or future appropriations from the EU budget without affecting end-beneficiaries of EU funds. 
Resources cancelled would remain within the EU budget. 

Still  in  the  context  of  the  wider  economic  governance  of  the  EU,  the  verification  of  the 
principle of additionality should be reformed by linking it to the EU economic surveillance 
process,  using  indicators  already  provided  in  the  Stability  and  Convergence  Programmes 
which Member States submit to the Commission every year.  

Co-financing is one of the fundamental principles of cohesion policy ensuring ownership of 
the policy on the ground. Its level should be reviewed and, possibly, differentiated to reflect 
better the level of development, EU added value, types of action and beneficiaries. 

Finally, other instruments which could further strengthen the effectiveness of cohesion policy 
also  need  to  be  explored.  For  example,  a  performance  reserve  could  be  established  at  EU 
level  to  encourage  progress  towards  Europe  2020  targets  and  related  national  targets  and 
objectives: a limited share of the cohesion budget would be set aside and be allocated, during 
a  mid-term  review,  to  the  Member  States  and  regions  whose  programmes  have  contributed 
most  –  compared  to  their  starting  point  –  to  the  2020  targets  and  objectives.  Also,  the 
experience gained over the current period has demonstrated that the Commission needs some 
resources  to  support  directly  experimentation  and  networking,  along  the  lines  of  the 
innovative actions of previous programming periods. 

2.4. 

Improving evaluation, performance and results 

Higher-quality, better-functioning monitoring and evaluation systems are crucial for moving 
towards  a  more  strategic  and  results-oriented  approach  to  cohesion  policy.  A  number  of 
changes would support this shift. 

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First,  the  starting  point  for  a  results-oriented  approach  is  ex-ante  setting  of  clear  and 
measurable  targets  and  outcome  indicators.  Indicators  must  be  clearly  interpretable, 
statistically  validated,  truly  responsive  and  directly  linked  to  policy  intervention,  and 
promptly collected and publicised. Indicators and targets should be agreed in the discussions 
on  the  programming  documents  in  addition  to  a  few  core  Fund-specific  indicators  for  all 
operational  programmes  linked  to  the  Europe  2020  framework.  Moreover,  timely  and 
complete submission of accurate information on the indicators and on the progress towards 
the agreed targets would be central to the annual reports.  

Second, ex-ante evaluations should focus on improving programme design so that the tools 
and  incentives  for  achieving  objectives  and  targets  can  be  monitored  and  evaluated  during 
implementation.  

Third, evaluation should make much greater use of rigorous methods in line with international 
standards,  including  impact  evaluation.  Whenever  possible,  impact  evaluations  would  be 
designed  at  an  early  stage  to  ensure  collection  and  dissemination  of  the  appropriate  data. 
Moreover,  plans  for  on-going  evaluation  of  each  programme  would  become  an  obligation, 
since  they  facilitate  transparency  at  EU  level,  foster  evaluation  strategies  and  improve  the 
overall quality of evaluations. Evaluations could also be envisaged once a certain amount of 
the funds has been certified to the Commission.  

Finally,  Member  States  could  prepare  a  report  synthesising  results  of  on-going  evaluations 
they  conduct  during  the  programming  period  with  a  view  to  giving  a  comprehensive 
summative evaluation of programme performance. 

2.5. 

Supporting use of new financial instruments 

The  EU  budget  review  makes  a  strong  case  for  increasing  the  leverage  effect  of  the  EU 
budget.  New  forms  of  finance  for  investment  have  been  developed  in  the  2007-2013 
programming period, moving away from traditional grant-based financing towards innovative 
ways of combining grants and loans. The Commission would like Member States and regions 
to make a more extended use of such instruments in the future. 

Financial  instruments  help  to  create  revolving  forms  of  finance,  making  them  more 
sustainable over the longer term. This is also one way of helping Europe to increase resources 
for  investment,  especially  in  times  of  recession.  It  opens  new  markets  to  different  forms  of 
public-private partnership, bringing in the expertise of international financial institutions. 

To improve financial engineering instruments within cohesion policy, a number of measures 
could be examined: 

–  Provide  greater  clarity  and  differentiation  between  rules  governing  grant-based 
financing and rules governing repayable forms of assistance in the regulatory framework, 
especially on eligibility of expenditure and audits; 

–  Channel generic financial support to firms mainly via financial engineering instruments 
and  use  grants  to  co-finance  targeted  support  schemes  (innovation,  environmental 
investments, etc.); 

–  Extend  both  the  scope  and  scale  of  financial  engineering  instruments:  in  terms  of 
scope,  to  encompass  new  activities  (e.g.  sustainable  urban  transport,  research  and 
development,  energy,  local  development,  lifelong  learning  or  mobility  actions,  climate 

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change  and  environment,  ICT  and  broadband);  in  terms  of  scale,  to  combine  interest 
subsidies with loan capital or other forms of repayable financing. 

•  How  could  the  Europe  2020  Strategy  and  cohesion  policy  be  brought  closer  together  at 

EU, national and sub-national levels? 

•  Should  the  scope  of  the  development  and  investment  partnership  contract  go  beyond 

cohesion policy and, if so, what should it be?  

•  How could stronger thematic concentration on the Europe 2020 priorities be achieved?  

•  How  could  conditionalities,  incentives  and  results-based  management  make  cohesion 

policy more effective?  

•  How  could  cohesion  policy  be  made  more  results-oriented?  Which  priorities  should  be 

obligatory? 

3. 

STRENGTHENING GOVERNANCE 

3.1. 

Introducing a third dimension: territorial cohesion 

The  Lisbon  Treaty  has  added  territorial  cohesion  to  the  goals  of  economic  and  social 
cohesion. As a result,  it  is necessary  to address this  objective in  the new  programmes, with 
particular  emphasis  on  the  role  of  cities,  functional  geographies,  areas  facing  specific 
geographical or demographic problems and macro-regional strategies. 

Urban  areas  can  be  the  engines  of  growth  and  hubs  for  creativity  and  innovation.  Higher 
growth levels and new jobs can be created provided a critical mass of actors like companies, 
universities and researchers is established. Urban problems, whether related to environmental 
degradation or to social exclusion, call for a specific response and for direct involvement of 
the  level  of  government  concerned.  Accordingly,  an  ambitious  urban  agenda  should  be 
developed  where  financial  resources  are  identified  more  clearly  to  address  urban  issues  and 
urban  authorities  would  play  a  stronger  role  in  designing  and  implementing  urban 
development strategies. Urban action, the related resources and the cities concerned should be 
clearly identified in the programming documents. 

For the future, one aspect which should be examined is whether the regulatory architecture of 
cohesion  policy  should  allow  greater  flexibility  in  organising  operational  programmes  in 
order to reflect the nature and geography of development processes better. Programmes could 
then  be  designed  and  managed  not  only  at  national  and  regional  levels,  but  also  —  for 
example — at the level of groups of towns or of river and sea basins. 

The  report  has  shown  that  in  some  cases  geographical  or  demographic  features  could 
intensify development problems. This is particularly true of the outermost regions but also of 
northernmost regions with very low population density and island, cross-border and mountain 
regions, as explicitly recognised by the Lisbon Treaty. It will be necessary to develop targeted 
provisions  to  reflect  these  specificities,  without  unnecessarily  multiplying  instruments  and 
programmes.  Territorial  cohesion  also  means  addressing  urban-rural  linkages  in  terms  of 
access to affordable and quality infrastructures and services, and problems in regions with a 
high concentration of socially marginalised communities. 

Finally,  further  work  on  new  macro-regional  strategies  should  be  based  on  a  thorough 
review  of  existing  strategies  and  the  availability  of  resources.  Macro-regional  strategies 

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should be broad-based integrated instruments focused on key challenges and supported by a 
reinforced trans-national strand, although the bulk of funding should come from the national 
and regional programmes co-financed by cohesion policy and from other national resources. 

3.2. 

Reinforcing partnership 

Effective  implementation  of  Europe  2020  requires  a  governance  system  that  involves  the 
actors of change in Member States and that links the EU, national, regional and local levels of 
administration.  

In order to mobilise fully all involved, representation of local and regional stakeholders, social 
partners and civil society in both the policy dialogue and implementation of cohesion policy 
should  be  strengthened.  With  this  in  mind,  support  for  the  dialogue  between  public  and 
private  entities,  including  socio-economic  partners  and  non-governmental  organisations, 
should be maintained. 

In this context, the role of local development approaches under cohesion policy should be 
reinforced,  for  example  by  supporting  active  inclusion,  fostering  social  innovation, 
developing  innovation  strategies  or  designing  schemes  for  regeneration  of  deprived  areas. 
These should be closely coordinated with similar actions supported under rural development 
and maritime policies. 

•  How  can  cohesion  policy  take  better  account  of  the  key  role  of  urban  areas  and  of 
territories  with  particular  geographical  features  in  development  processes  and  of  the 
emergence of macro-regional strategies? 

•  How  can  the  partnership  principle  and  involvement  of  local  and  regional  stakeholders, 

social partners and civil society be improved?  

4. 

A STREAMLINED AND SIMPLER DELIVERY SYSTEM 

Although it is too early to draw final conclusions on the effectiveness of the delivery system 
of cohesion policy in the period 2007-2013, Member States have argued against too frequent 
and  drastic  amendments  of  the  rules  that  could  hamper  implementation.  Nevertheless,  a 
number of targeted changes deserve to be examined. 

4.1. 

Financial management 

In  line  with  the  recent  proposal  for  revision  of  the  Financial  Regulation4,  each  year  the 
authority responsible for managing cohesion policy programmes would present a management 
declaration  accompanied  by  the  annual  accounts  and  an  independent  audit  opinion.  This 
would strengthen the line of accountability for expenditure co-financed by the EU budget in 
any given financial year.  

On the basis of the annual management declaration, the Commission proposes to introduce a 
periodical  clearance  of  accounts  procedure  for  cohesion  policy.  This  would  reinforce  the 
assurance process and also allow regular partial closure of programmes.  

4 

‘Proposal for a Regulation of the European Parliament and of the Council on the Financial Regulation 
applicable to the general budget of the European Union’ - COM(2010) 260. 

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The  Commission  has  to  consider  whether  not  reimbursing  national  authorities  until  the 
corresponding  EU  contribution  has  been  paid  to  beneficiaries  would  speed  up  payments  of 
grants to beneficiaries and increase the incentive for strong national control. 

Also,  the  Commission  will  examine  the  possibility  of  introducing  output-  or  results-based 
elements  for  disbursement  of  the  EU  contribution  to  operational  programmes  or  parts  of 
programmes, depending on the type of action. 

Finally,  simplified  methods  of  reimbursement,  such  as  the  standard  scale  of  unit  costs  and 
lump-sum  payments  for  grants  introduced  for  2007-2013,  should  be  further  promoted,  thus 
increasing their impact. This would be another way of moving towards a more results-based 
approach. 

4.2. 

Reducing the administrative burden 

The  general  approach  for  2007-2013,  under  which  eligibility  rules  are  set  at  national  level, 
should  be  retained.  However,  common  rules  should  be  adopted  on  key  points  such  as 
overheads  covering  different  EU  Funds.  Alignment  of  rules  on  eligibility  of  expenditures 
across  policy  areas,  financial  instruments  and  funds  would  simplify  use  of  funds  by 
beneficiaries  and  management  of  funds  by  national  authorities,  reducing  the  risk  of  errors 
while providing for differentiation where needed to reflect the specificities of the policy, the 
instrument and the beneficiaries. 

In  line  with  the  proportionality  principle,  it  would  also  be  useful  to  examine  how  control 
measures could be made more cost-effective and risk-based to improve their effectiveness and 
efficiency  while  ensuring  adequate  coverage  of  the  inherent  risks  at  a  reasonable  cost,  in 
accordance with the principle of sound financial management. 

4.3. 

Financial discipline 

The  de-commitment  rule  aims  to  ensure  that  projects  are  implemented  within  a  reasonable 
timeframe  and  to  encourage  financial  discipline.  However,  it  can  distort  the  behaviour  of 
Member  States  and  regions  by  concentrating  too  much  attention  on  quick,  and  less  on 
effective,  use  of  resources.  Furthermore,  application  of  the  de-commitment  rule  has  been 
complicated by a number of derogations. There is a need to strike a careful balance between 
ensuring  the  quality  of  investment  and  smooth  and  rapid  implementation.  One  possibility 
would  be  to  apply  N+2  with  the  exception  of  the  first  year  to  all  programmes  and  remove 
exemptions and derogations. 

4.4. 

Financial control 

With regard to management and control systems, there is a need not only to deliver stronger 
assurance but  also  to achieve greater commitment, on the part of Member States, to quality 
control.  This  would  allow  the  European  Parliament,  the  Commission  and  Member  States  to 
focus more on the results and impact of the policy.  

The  first  proposal  is  to  review  the  procedure  for  ex-ante  assessment  of  the  systems,  taking 
account  of  the  experience  gained  from  the  ex-ante  compliance  assessment  for  2007-2013 
programmes in order to prevent problems in management and control systems. The procedure 
should  be  streamlined  whilst  retaining  its  benefits.  This  can  be  achieved  by  targeting  the 
assessment on the main management body responsible by means of an accreditation process 
and by reviewing the Commission’s involvement in this process.  

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The second proposal is to reinforce assurance by concentrating responsibilities. An accredited 
body would assume sole responsibility for proper management and control of the operational 
programme.  

•  How  can  the  audit  process  be  simplified  and  how  can  audits  by  Member  States  and  the 
Commission  be  better  integrated,  whilst  maintaining  a  high  level  of  assurance  on 
expenditure co-financed? 

•  How could application of the proportionality principle alleviate the administrative burden 
in terms of management and control? Should there be specific simplification measures for 
territorial cooperation programmes? 

•  How  can  the  right  balance  be  struck  between  common  rules  for  all  the  Funds  and 

acknowledgement of Funds' specificities when defining eligibility rules? 

•  How can financial discipline be ensured, while providing enough flexibility to design and 

implement complex programmes and projects? 

5. 

THE ARCHITECTURE OF COHESION POLICY  

Cohesion  policy  aims  to  promote  harmonious  development  of  the  Union  and  its  regions  by 
reducing regional disparities (Article 174 of the Treaty). It also underpins the growth model of 
the  Europe  2020  strategy  including  the  need  to  respond  to  societal  and  employment 
challenges all Member States and regions face. The policy supports such development with a 
clear  investment  strategy  in  every  region  by  increasing  competitiveness,  expanding 
employment, improving social inclusion and protecting and enhancing the environment. The 
multilevel governance system for the policy helps to make the EU more visible to its citizens. 

All regions and Member States would be eligible to cohesion policy and able to tailor their 
strategy in an integrated manner to their specific strengths and weaknesses. 

As today, support would be differentiated between regions based on their level of economic 
development  (measured  by  GDP  per  capita),  drawing  a  clear  distinction  between  ‘less’  and 
‘more’ developed regions. To soften the transition between these two categories and ensure a 
fairer treatment for regions with similar level of economic development, the question could be 
asked  as  to  whether  a  simpler  system  with  a  new  intermediate  category  of  regions  could 
replace  the  current  phasing-out  and  phasing-in  system.  This  category  would  also  include 
regions currently eligible under the ‘convergence’ objective but whose GDP would be higher 
than 75% of the Union average according to the latest statistics.  

At the same time, and consistently with the EU Budget Review, there is a need to consider for 
the  future  architecture  of  cohesion  policy,  how  the  ESF  could  be  refocused  on  securing  the 
2020  targets  and  objectives  and  how  to  achieve  greater  visibility  and  predictable  funding 
volumes.  It  is  also  important  to  examine  how  the  Fund  could  better  serve  the  European 
employment  strategy  and  contribute  to  the  comprehensive  European  employment  initiative 
called for by the EU Budget Review. 

The  policy  will  continue  to  focus  on  implementing  the  Integrated  Guidelines  for  economic 
and employment policies. 

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The Cohesion Fund would continue to benefit Member States whose GNI per capita is lower 
than 90 % of the Union average. 

Finally, cohesion policy would continue to foster territorial dimensions of cooperation (cross-
border,  transnational  and  inter-regional).  This  would  include  a  review  and  simplification  of 
the current arrangements for cross-border cooperation, including IPA, ENPI and EDF cross-
border cooperation at the EU’s external borders, and also of current practices in transnational 
action supported both by the ERDF and the ESF. 

•  How  can  it  be  ensured  that  the  architecture  of  cohesion  policy  takes  into  account  the 
specificity  of  each  Fund  and  in  particular  the  need  to  provide  greater  visibility  and 
predictable funding volumes for the ESF and to focus it on securing the 2020 objectives? 

•  How  could  a  new  intermediate  category  of  regions  be  designed  to  accompany  regions 

which have not completed their process of catching up?  

6. 

NEXT STEPS 

The  fifth  cohesion  report  sets  out  some  of  the  Commission’s  key  ideas  for  the  reform  of 
cohesion policy following a long discussion which started with the fourth cohesion report in 
2007. These will be fine-tuned and consolidated in the next few months. 

The Commission invites all stakeholders to give their responses to the questions presented in 
this Communication. Comments can be posted until 31 January 2011 on:   
http://ec.europa.eu/regional_policy/consultation/index_en.htm. 

Due account will be taken of the responses received when drafting the legislative proposals to 
be presented immediately after the adoption of the new Multi Annual Financial Framework in 
2011. 

The Fifth Cohesion Forum  which  will take place in Brussels on 31 January and  1  February 
2011 will provide a good opportunity to discuss these ideas. 

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