Changes from report parliamentary committee draft to plenary report

AddedS. whereas the implementation rates for cohesion policy differ significantly among Member States and among funding programmes; whereas certain Member States and regions have consistently low implementation rates, which necessitates that further attention be paid to the efficiency of these programmes’ management;

AddedT. whereas despite the regulatory improvements introduced in the 2014-2020 programming period and the improvements to the 2021-2027 regulatory framework, a number of challenges still remain; whereas the policy has proven to be very complex to implement for the managing authorities, competent local and regional bodies and final beneficiaries;

AddedU. whereas public procurement rules in many Member States, alongside additional national auditing and monitoring, generate an additional burden for managing authorities and beneficiaries;

AddedV. whereas, while following a strategic approach throughout the programming period is of the utmost importance, it should be possible to reassess and adjust this approach midterm; whereas, nevertheless, a sufficient degree of flexibility in cohesion policy’s programming is needed to address unexpected events that occur during the programming period;

AddedW. whereas cohesion policy funding should comply with the Charter of Fundamental Rights of the EU, the principles of the rule of law, and the European code of conduct on partnership;

AddedX. whereas the principles of multilevel governance and partnership need to be significantly strengthened to effectively involve the local and regional level in the programming, reprogramming and implementation of EU funds;

AddedY. whereas cohesion policy has effectively helped to reduce disparities over the years, but, as made clear by the eighth cohesion report, some inequalities persist among Member States, among and within regions, among different types of areas (as referred to in Articles 174 and 349 TFEU), and within the richest urban areas; whereas new disparities, such as the regional innovation divide, have also emerged;

AddedZ. whereas the outermost regions and island territories with the status of overseas countries and territories face a significant number of structural constraints and are less developed than the continental regions of their Member States; whereas a stable and predictable regulatory environment is particularly important for the efficient management of cohesion policy funds in these regions;

AddedAA. whereas the green and digital transitions are moving at very different speeds across the EU and should be properly managed to avoid adverse impacts on certain regions and even greater disparities;

AddedAB. whereas while eastern EU regions have been catching up, other regions, especially in the southern EU, have stagnated; whereas certain regions are caught in a development trap, characterised by long periods of slow or negative growth, with low productivity and low levels of job creation;

AddedAC. whereas the Russian war of aggression against Ukraine has particularly affected the EU's eastern border areas;

AddedAD. whereas demographic ageing in the EU as a whole has led to a shrinking working-age population; whereas several EU regions are facing the ongoing departure of their young and skilled workers; whereas rural, peripheral, outermost and industrial-transition regions in the EU are particularly affected by these worrying demographic trends; whereas these trends, if left unaddressed, will have undesirable long-term effects on the EU;

AddedAE. whereas EU pre-accession and enlargement processes require a well-balanced and targeted role for regional development and cohesion policy;

AddedOutcomes

Added1. Notes that evaluations carried out by the Member States on the outcomes of 2014-2020 cohesion policy investments show that, in general, cohesion policy brought about positive results in the areas that it supported, ; acknowledges that such investments have contributed to the Europe 2020 strategy objective of smart, sustainable and inclusive growth;

Added2. Welcomes cohesion policy’s contribution to research and innovation, as it, among other things, strengthened cooperation between the research community and businesses and helped turn research into marketable products or services; notes that, according to the Commission’s figures, by the end of 2022, more than 75 000 companies had cooperated with research institutions and around 37 000 had introduced new products to the market thanks to support through the European Regional Development Fund (ERDF); notes in addition that, by the same date, more than 72 000 researchers were working in better facilities; underlines that cohesion policy has also helped bridge the digital divide between regions by supporting the development of information and communications technology infrastructure in less-developed regions; welcomes the fact that, as a result, 7.8 million households had been provided with better broadband access by the end of 2022;

Added3. Points out that cohesion policy support has also brought tangible benefits to thousands of SMEs; stresses that this has been one of the best performing areas of ERDF support; underlines that the ERDF had provided support to more than 2.2 million businesses by the end of 2022, which created around 370 000 jobs; notes that evaluations carried out in Czechia, Poland, Germany, the Netherlands and Austria contain examples of SMEs that have become more competitive and innovative, increased their productivity and gained better access to international markets;

Added4. Underscores that cohesion has also played an essential role in the transition to a low-carbon economy; notes that reducing energy consumption in buildings is a major component of this shift and that support from cohesion policy in this area has already borne fruit; welcomes the fact that evaluations by the Member States show that measures to improve energy efficiency have been effective across the EU; notes that, by the end of 2022, the ERDF had helped to improve the energy efficiency in 550 000 households; highlights that there is evidence that cohesion policy supported investments in several coal regions that contributed to decarbonisation; notes that in Asturias, Spain, efforts focused on youth and female employment in rural areas, with the aim of incentivising entrepreneurship and social inclusion; also notes that in the region of Yugoiztochen, in Bulgaria, cohesion policy funds have focused on energy efficiency, the modernisation of SMEs and the promotion of skills development; acknowledges that measures aimed at renewable energy production have increased renewable production capacity in the EU by 6 000 MW by the end of 2022, with a target of 8 700 MW by the end of 2023; notes that positive results have been reported in this area, for example in Estonia and regions of France;

Added5. Underlines that evaluations of efforts related to climate change adaptation and risk prevention show the need for cooperation across borders to make measures financed by cohesion policy truly effective; underlines that some countries have already implemented joint risk prevention and civil protection measures, notes that such cooperation has occurred between Italy and France, Czechia and Poland, and Italy and Austria; stresses that, in regard to climate change adaptation, thanks to cohesion investments 29 million people are now less exposed to flooding;

Added6. Notes that cohesion support from the ERDF and the Cohesion Fund has also increased the number of people benefiting from a better water supply (8.3 million people by the end of 2022) and better management of their municipal waste; notes that most of the targeted beneficiaries (70 %) of the measures to improve water supply live in Italy, Romania, Greece, Portugal, Bulgaria and Czechia; also notes that in France and Belgium, cohesion-funded projects have helped boost the circular economy;

Added7. Stresses that energy and transport networks have received significant investments from the ERDF and the Cohesion Fund; notes that, although the impact of this kind of infrastructure project can only be properly assessed in the longer term, according to evaluations carried out in Poland and Czechia, some of the investments in road and rail infrastructure have already resulted in fewer road accidents, reduced travel times and less pollution; welcomes the fact that, in Slovakia, the modernisation of tram lines has improved connections, reduced travel time, improved safety and helped to reduce noise and vibrations; notes that, in addition, financed natural gas projects in Member States such as Poland and Bulgaria have contributed to the strategic objective of diversifying their energy supply; welcomes the fact that the Greece-Bulgaria gas interconnector in Bulgaria, supported by the ERDF, started operating in October 2022 and is contributing to the EU’s strategic aims of energy supply autonomy and source diversification;

Added8. Acknowledges that cohesion, especially through the European Social Fund (ESF) and the Youth Employment Initiative, has supported successful employment, social inclusion and educational and vocational training measures; stresses that by the end of 2022, 6.8 million people had found a job thanks to measures supported by the ESF and the Youth Employment Initiative, and 10.2 million people had earned a qualification;

Added9. Underlines that evaluations from Member States such as Italy, Germany, Poland and Ireland have shown that people, especially young people, who participated in training measures, apprenticeships or traineeships supported by cohesion policy funds were significantly more likely to find jobs; notes that Poland and Ireland achieved good results with projects aimed at the long-term unemployed; also notes that an evaluation of the 2014-2020 Youth Employment Initiative carried out in Hungary found that the programme had contributed significantly to the probability of participants being employed in the short term, but that this impact was declining with time; stresses that another evaluation from Hungary concluded that the labour market integration support schemes financed through the ESF had a positive and substantial impact on finding employment; notes that an evaluation of the Youth Employment Initiative carried out in Sweden found overall positive effects on employment for participants, especially those with a foreign background; stresses that training measures for both pupils and teachers have had a positive impact on early school-leaving rates, for example in Germany, Portugal and Spain;

Added10. Notes that the ESF has helped entrepreneurs launch new businesses and provided training so that companies can better adapt to changes in the market; underlines that the ESF programme in Thuringia, Germany dedicated to strengthening entrepreneurship has supported, among other projects, the Thuringian Centre for Start-ups and Entrepreneurship; acknowledges that, by the end of 2021, the centre had helped approximately 2 900 people start a new business in the region; notes that refugees and migrants arriving in Luxembourg had access to a dedicated entrepreneurship programme supported by the ESF;

Added11. Stresses that, through cohesion policy financial support for projects in the healthcare sector, mainly through ESF and ERDF investments, 58.3 million people had access to improved healthcare services across the EU by the end of 2022; underlines that, in Lithuania, for example, cohesion-funded projects have managed to reduce the risk of cardiovascular diseases and the suicide rate;

Added12. Welcomes the cohesion policy contribution to territorial cooperation; notes that this specific goal of the ERDF helped fund cross-border transnational and interregional projects in areas such as research, development and innovation and the environment; underlines that, as reported by the Commission, without this specific cohesion support, most of these cooperation projects would not have taken place; stresses that, by the end of 2022, more than 40 000 businesses had participated in cross-border transnational or interregional research projects, and around 178 000 people had benefited from cross-border mobility initiatives; points out that, according to recent evaluations compiled by the Commission, there are examples of successful cooperation on thematic issues, such as information and communications technology projects related to smart cities in Greece and Cyprus; notes, in addition, that the Sweden-Finland-Norway Botnia-Atlantica programme has increased knowledge on sea and coastal areas protection; underlines that the impact evaluation of the 2014-2020 Central Europe Interreg programme , comprising Austria, Croatia, Czechia, Germany, Hungary, Italy, Poland, Slovakia and Slovenia, showed that, by end of 2021, the programme had had positive outcomes in the fields of innovation, low carbon, the environment, culture and transport; welcomes the fact that the Romania-Serbia Interreg programme also contributed to strengthening the cooperation between both countries in all relevant areas, and that the Croatia-Serbia programme has supported renewable electricity production and increased energy efficiency; draws attention to the positive results of the Sweden, Denmark and Norway Interreg programme in the area of the green economy;

Added13. Welcomes cohesion policy’s response to the latest crises; notes that more than 300 CRII and CRII+ programme amendments were adopted, resulting in almost EUR 28 billion in funds being redirected to tackle the consequences of the COVID-19 crisis; underlines that EUR 13 billion was redirected to provide business support to the companies most affected by the COVID-19 crisis; notes that only a few evaluations have been carried out in this area so far; notes, however, that, in the Netherlands, Malta and France (Grand Est), the measures funded were considered relevant to the needs of people and companies, according to available evaluations; also notes that there is evidence that the ERDF business support in Hungary made possible by this flexibility had a positive effect on the companies targeted; notes that the Commission’s preliminary evaluation of the support provided by the ESF and the Fund for European Aid to the Most Deprived under the CRII and CRII+ was also mainly positive; underlines that the CRII and CRII+ reached their objectives in most Member States, as they used this funding flexibility to efficiently reallocate remaining resources to fund short-term working arrangements, social inclusion measures and their healthcare systems, depending on their national contexts; stresses that, thanks to the CRII and CRII+, governments were also able to maintain their level of awarding contracts and expenditure during this difficult period; notes that REACT-EU support focused on recovery measures driven by future-oriented priorities, such as the green and digital transitions; highlights that an example of this support is the project Green Change Zealand, which helped 20 SMEs in Denmark reduce their energy and material consumption through green conversion plans;

Future cohesion policy

General principles

Change 14

Changed1.14. Insists thatthat, dueowing to its regional focus, placed-based approach, strategic planning and effective implementation model ,model, cohesion policy should remain the EU’s main investment instrument for reducing disparities anddisparities, stimulatingensuring regionaleconomic, growthsocial and continue to be a key contributor to supporting recovery fromterritorial symmetriccohesion and asymmetric shocks; calls for astimulating clearregional demarcationand betweenlocal cohesionsustainable policygrowth and otherthat instrumentsit inshould ordercontinue to avoid overlaps and competition between EUbe instruments;a believeskey thatcontributor thereto mustsupporting bea ansocially increasejust intransition theand overallrecovery cohesionfrom budgetsymmetric and in the MFF’sasymmetric shareshocks ofand the policy compared to thefight 2021-2027against programmingclimate period;change;

Change 15

Removed2. Considers that cohesion investments should remain under shared management for programming and implementation in order to cater for local needs of regions, urban, rural and remote areas; acknowledges that co-programming, co-financing, coresponsibility and co-ownership are the most effective methods for successful implementation of any EU investment policy and any EU-financed project;

Added15. Regrets the reduction in the share of the 2021-2027 MMF dedicated to cohesion, compared to the previous programming period; recalls that the COVID-19 pandemic and the Russian war of aggression against Ukraine have created new disparities between regions; believes that there must be an increase in real terms in the overall cohesion budget and in the MFF’s share of the policy compared to the 2021-2027 programming period;

Removed3. Underscores that the cohesion policy budget should not be used for new non-cohesion policy instruments and programmes, either within or outside the MFF; stresses that flexibility in the repurposing of cohesion funding should be a bottom-up driven process, initiated either by a Member State or by its regional or local level;

Added16. Considers that cohesion investments should remain under shared management for programming and implementation in order to be able to respond to the needs of Member States, regions, and urban, rural and remote areas; acknowledges that co-programming, co-financing, co-responsibility and co-ownership are the most effective methods for the successful implementation of a long-term EU investment policy and EU-financed projects;

RemovedLocal focus

Added17. Underlines that the emergence of budgetary support instruments based on direct management and a simpler delivery model could lead to a renationalisation of cohesion policy and endanger one of its basic principles: multilevel governance; opposes therefore any renationalisation of cohesion policy;

Removed4. Calls for disaster prevention and preparedness investments to be guaranteed either through a dedicated policy objective, thematic concentration or a specific enabling condition to ensure investments in local infrastructure and risk management in less developed urban and rural areas, including border regions; believes that targeted financing should focus on climate change adaptation and mitigation by tackling the side effects of climate change locally (slow onset events as well as extreme weather events), including wildfires, floods, landslides, heatwaves, coastal erosion and other events;

Added18. Insists that all EU regions should remain eligible for cohesion policy funding; underlines that this is the only way to address regional challenges, to achieve a more balanced development pattern across the EU and to tackle unique regional development problems on the ground;

Removed5. Calls for the creation of a technical assistance programme specifically designed for smaller municipalities and cross-border and rural areas that face new challenges such as the green transition and climate change; believes that the support should be in the form 100 % EU financing for administrative capacity-building, project design and strategic planning capabilities (including planning instruments), while the allocation criteria should include the number of inhabitants and the needs and challenges of these areas;

Added19. Stresses that the future cohesion policy must continue to pay attention to regions that suffer from severe and permanent natural and demographic limitations, such as sparsely populated areas, islands, mountainous areas and cross-border regions, in full compliance with Article 174 TFEU; notes, in this context, that the EU has drawn up an urban and a rural agenda, and expects the publication of an island agenda as well;

Removed6. Calls for cohesion policy to include a stronger urban dimension through designated investments in urban areas as well as stronger links between urban and rural projects and investments; calls for the proportion of national ERDF allocations for urban development to be increased from 8 % to 12 %; calls for this funding to be co-programmed with local authorities and for their benefit; underlines in this context that administrative capacity is essential for ensuring that managing bodies and local authorities acquire technical knowledge on climate change which they can use for urban planning and urban management; is convinced that this will lead to better design and evaluation of project proposals, more effective allocation of resources and satisfactory budgetary implementation without significant risk of decommitments; acknowledges that integrated territorial investments have a fundamental role in quality implementation and absorption of resources;

Added20. Calls on the Council to unblock and start its work on the European cross-border mechanism file;

Removed7. Calls for the use of cohesion decommitments for thematic concentration on local infrastructure and for reserve margins within cohesion policy that will absorb future inflation or supply chain shocks; believes that the mechanism should operate on a rolling basis following the multiannual and annual decommitment cycles;

Added21. Underlines the importance of applying Article 349 TFEU in all EU policies to achieve the objectives set out therein; recalls the vital role played by cohesion policy in the outermost regions; emphasises the importance of designing and maintaining tailor-made programmes and measures for these regions, as the majority of the outermost regions are still among the less-developed regions or should be treated as such; calls on the Commission to guarantee high co-financing rates, specifically for the outermost regions, by designating all of these regions as less-developed regions for this purpose;

Removed8. Calls for the reduction of thematic concentration requirements in order to allow for more flexibility to cater for local needs, following the principle of place-based policy in the EU’s territorial investments; underscores that thematic concentrations should be adapted to the way regions and cities operate in practical terms, from programming and reprogramming to implementation and closure; is certain that the key principle should be a tailor-made investment approach geared to specific needs on the ground;

Added22. Stresses that disproportionate burdens, such as the inherent structural disadvantages faced by all border regions, should be compensated with a separate system for regional aid designed specifically for border regions; demands that 0.26 % of the EU’s cohesion policy budget be reserved exclusively for development in the border regions (‘borderland billion’) at the beginning of every new programming period, starting with the 2028-2034 period;

Removed9. Calls for initial allocations and co-financing rates to be assessed on the basis of NUTS 3 (nomenclature of territorial units for statistics) in order for funding to be directed to where it is most needed and to avoid pockets of underdevelopment from arising ; underlines that such a shift should take into account possible negative effects on EU financing for larger urban areas; stresses that this is necessary in order not to stall the development trajectory of metropolitan areas that were previously supported more intensively by cohesion policy;

Added23. Believes that the ‘do no significant harm’ criteria must prevent environmentally harmful measures in order to achieve the goal of a carbon-neutral Europe by 2050 at the latest; calls on the Commission to introduce, in the forthcoming cohesion policy post-2027 legal framework, strict criteria to improve the application of the ‘do no significant harm’ principle; calls furthermore for at least the same level of climate-related spending in the new framework in order to achieve the climate objectives set by the Paris Agreement, and in line with the UN’s Sustainable Development Goals and the European Green Deal;

Removed10. Considers that for the allocation of funds for local projects, the focus should be on a smaller number of higher budget, common benefit projects, instead of scattering the limited resources across a high number of low budget projects; calls for guidance and planning support to avoid decommitments and repurposing;

Added24. Underlines that the main purpose of the EU's cohesion policy is to reduce disparities among Member States and especially between and within regions in the Member States; underscores that the cohesion policy budget should be primarily used for cohesion policy goals and not for new non-cohesion policy instruments and programmes, either within or outside the MFF, including optional transfers;

Removed11. Calls for the creation of local cohesion boards in the managing authorities and monitoring committees, which should have decision-making powers, including on co-programming and co-reprogramming with local authorities; reiterates that these boards should include representatives of urban and rural administrations, including mayors;

Added25. Acknowledges the need for built-in crisis flexibility; proposes the creation of a dedicated axis for local and regional authorities to address emerging priorities; stresses, however, that the repurposing of cohesion funding should not be triggered by new legislative initiatives by the Commission, but instead should be initiated by a managing authority in a bottom-up process, after mandatory consultations with regional and local authorities and with the appropriate involvement of civil society, as provided for in the Common Provisions Regulation and the Code of conduct on partnership; underlines that this will not erode the multiannual orientation of the policy, but will help it best adapt to the fast-changing nature of our times;

Removed12. Is convinced that promoting an increased sense of local ownership in the long term, the durability of EU projects and higher co-financing leverage can be achieved through more fiscal decentralisation towards municipalities; acknowledges that such a path improves municipal borrowing capacity linked to financial instruments provided by the EU budget; underlines that local budgets need more fiscal space to compensate for inflation shocks and crises;

Added26. Regrets that delays in the MFF negotiations led to considerable delays in the 2021-2027 programming period, impacting beneficiaries and especially management authorities, which faced an enormous burden in dealing with both the finalisation of the 2014-2020 funding period and the start of the current funding period; calls on the Commission, therefore, to assess the legal possibility of creating two distinct parts within the Common Provisions Regulation, namely the content-related part (political) and the MFF-related part (financial resources), for the post-2027 programming period; believes that the content-related part should be negotiated and concluded before the MFF-related part to allow for management authorities to start preparing in a timely manner in order to ensure the principle of genuine partnership and an efficient use of cohesion policy instruments;

Removed13. Calls for paths for the decentralisation of cohesion policy management to be explored in order to bring management closer to the local level; stresses that preparatory work should ensure that adequate capacity and institutional backing is available in order to ensure effectiveness, reduce the number of irregularities as well as no additional administrative burden for contractors and for final beneficiaries;

Added27. Warns that the existence of multiple funds with cohesion objectives, sometimes with overlapping priorities, may hinder the effective implementation of cohesion policy; calls for a clear demarcation, as well as for alignment and complementarity, between cohesion policy and other instruments in order to avoid overlaps and competition between EU instruments; insists on the need to enhance such complementarity by bolstering the possibility of financing joint projects;

Removed14. Encourages multi-city projects and collaboration agreements in order to harness pooled capacities and economies of scale in EU investments in infrastructure, climate change and the green transition; believes that this process should lead to a greater sense of ownership of projects and the consolidation of investments, instead of fragmentation and lack of synergies;

Added28. Draws attention to the local, regional and national authorities’ difficulties in recruiting a qualified workforce to implement, manage and audit cohesion policy funds as one of the reasons for delays in the implementation of those funds; calls on the Member States and their regions to launch efforts to train and recruit specialised staff to optimise the implementation, management and auditing of EU funds in the future in order to make those funds as effective and efficient as possible;

Removed15. Calls for the further involvement of the EIB Group in cohesion policy investments, especially in less developed regions through the provision of support to sustainable cities, sustainable energy and local innovation projects; calls for the expansion of the local project assistance and financial instruments that complement and leverage EU grants;

Added29. Notes that, as evidenced by the analyses of the performance of cohesion policy funds, including by the European Court of Auditors, there is room for improving the effectiveness of cohesion policy interventions for delivering on the EU’s overarching priorities and territorial challenges, such as competitiveness or the greening of the economy; believes that a broader response involving more EU policies and an effective targeting of funds will therefore be essential in fighting the geography of discontent;