Cohesion policy framework for integrated, sustainable urban development A policy background for post-2020 discussion Marton Matko, policy advisor WG IUD, WG MA 22-24 March, Brussels

What is cohesion policy / ESIF? Cohesion policy / ESIF is: An EU wide investment policy to achieve Europe2020 objectives Solidarity-based policy to reduce development disparities among regions (Article 174 TFEU) Set of common rules for the 5 funds introduced in 2014-2020 -> ESIF Close to 45% of the total EU budget (33% cohesion policy, 10% Rural dev) ERDF Cohesion policy ESF CF EAFRD EMFF ESI Funds

What does cohesion policy aim to achieve? EU2020 Strategy objectives (5 headline targets) Employment: 75% of people age 20-64 in work -> boost growth and job creation Climate and energy: GHG -20% (1990 levels), 20% of energy from renewables, 20% increase in energy efficiency -> transition to a low carbon economy Research and development: 3% of EU GDP to be invested in R&D Education: 40% of age group 30-34 with completed higher education, reduce school dropout rate to 10% Poverty: 20 million less people in or AROPSE -> Tackle poverty and social exclusion Reduce disparities among regions more than fourfold GDP@PPS difference between poorest (BG, RO, PL, HU) and richest Compensate for natural or demographic handicaps Access to SGEI, reduce isolation in remote areas (islands, mountains, outermost areas)

Where is cohesion policy implemented? Eligibility All EU regions eligible for funding (272 NUTS2 regions in 28 MS) Amounts and conditions depend on level of development Less developed (<75% of EU avg GDP) Transition (75-90%) More developed (>90%) Cohesion Fund eligibility at MS level (90% of EU GDP)

Where is cohesion policy implemented? Concentrated: half the MS take 90% of budget Main beneficiaries are large and E-European MS But.. Enormous differences in per capita support EE 3.400 vs NL 111 EUR/capita

7-year programming periods (2014-2020, 2020+?) How does it work? 7-year programming periods (2014-2020, 2020+?) Shared management (COM / MS + regions) COM: adopts partnership agreements (ESIF) and operational programmes and their amendments, follows implementation, pays certified expenditure, reports to EP MS/Region: launches calls, grants funding, checks expenditure, pays grants, performs audits, monitors progress, evaluates impact Rules and procedures EU regulations (CPR+common strategic framework, fund specific), delegated/implementing acts, interpretation (+ guidance) national regulations, implementing acts Management and control system (MA/IB, CA, AA)

Thematic concentration What is new in 2014-2020? Thematic concentration Obligation to devote certain part of budget to priority areas (ERDF TOs -1-4, ESF TO9) Ex-ante conditionalities General/sector specific strategy or legislation as precondition Performance framework Access to a part of budget linked to achievement of milestones Integrated approach to territorial development = the urban dimension of cohesion policy

What does cohesion policy invest in? Funding structure focused on 11 thematic objectives and 50+ investment priorities ERDF Smart growth Sustainable growth Inclusive growth TO1 TO2 TO3 TO4 TO5 TO6 TO7 TO8 TO9 TO10 TO11 R&D ICT SME <CO2 CC ENV MOB EMPL SOCi EDU ADM Thematic concentration ESF CF

What types of investments does it support?

Urban and territorial dimension of CP 2014-2020 The integrated, place-based approach Why? to help address territorial challenges in their complexity through CP to help align specific local development needs with the thematic priorities of CP to promote multi-level governance (empowerment and cooperation) How? PLANNING: requesting long-term and integrated urban/territorial strategies PARTNERSHIP: by fostering horizontal and vertical cooperation (urban-rural, LAGs) FLEXIBILITY: allowing to combine different sources of thematic funding to support the implementation (ITI, CLLD) INCENTIVE: earmarking resources in pursuit of these objectives (SUD Article 7) OWNERSHIP: giving more responsibility to the local level (SUD Article 7, CLLD)

The urban dimension of cohesion policy Sustainable urban development (ERDF Art 7) Integrated urban development strategies => ca 800 cities involved Earmarked funding (min 5%) => 15 billion euros Delegated powers = cities responsible for project selection Urban innovative actions (Art 8) funding for experimentation, 370 m euros, themes linked to urban agenda First call: 16 of 18 winners are EUROCITIES members Urban development network Capacity building, networking and sharing knowledge for Art7 and UIA cities URBACT EU-wide learning programme for cities via thematic networks Territorial instruments ITI: combining different funding sources to implement integrated strategy CLLD: to empower local communities to implement their local strategy “Urban” investment priorities in ERDF TOs E.g. brownfield regeneration, deprived communities, multimodal urban mobility

There is no single model to implement SUD major EU-wide differences in… Nature of urban network/ social geography Degree of urbanisation, mono-/policentricity, most pressing urban challenges Level of decentralisation devolved competencies, local fiscal autonomy Urban policy traditions e.g Politique de la ville (FR), Soziale Stadt (DE) Programming constraints (e.g. thematic concentration, OP structure) …have a strong impact on territorial scope of strategies Sharing of power across national/ regional/local level (delegation of tasks) Availability of funding to match development needs, integrated approach Metropolitan area CZ, HR, PL, RO, SK Administrative city (most MS) Neighbourhood FR

If Mondrian and Kandinsky worked for DG REGIO Use of ERDF by type of territory and by territorial instrument Rural areas thinly populated Small urban areas intermediate density ITI 12 bn 6% SUD Art 7 ERDF 14.5 bn 7.8% CLLD 1.1 bn / 0.6% Large urban areas densely populated ERDF 196 billion

Cohesion policy support delivered via ITI ERDF, ESF and CF allocation by MS Programming results 20 MS use ITI 15 MS to deliver SUD 13 MS for other territories Total of EUR 13.8 billion ERDF 11.8 bn ESF 1.7 bn CF 0.3 bn 12 MS use both funds Concentration 80% by 9 MS 28% by PL alone 60% for SUD Article 7

Cohesion policy support to CLLD ERDF and ESF allocation by MS Programming results 18 MS apply CLLD in CP EUR 1.8 billion ERDF 1.1 bn (0.6%) ESF 0.7 bn (0.8%) For comparison: EAFRD 6.9 bn (7%) EMFF 0.5 bn (9%) 14 MS use both funds GR, HU, PL, PT, SE via multi-fund OP Concentration 92% by 9 MS 25% by CZ alone

ERDF support to SUD (Article 7) Share of ERDF budget (%) by MS and delivery mechanism Half of MS spend more than 7.5% CY and BG 20%+ BE 15%+ RO 11% IE, FR, LV, CZ, NL, HU, DE 8-10%

Preliminary conclusions: positive results ITI proved to be a flexible instrument which enables addressing diverse and complex urban and territorial challenges via combining various sources of funding. SUD (Article 7 ERDF) seems to have met real demand from Member States who allocated 50% more resources than required by the ERDF Regulation. SUD seems to have provided financial incentive to shift to a metropolitan area approach in urban development in some Member States ITI used for SUD provides on average twice the scope of thematic funding compared to a priority axis

Benefits, challenges and questions for future Territorial approach, tailor made solutions Local ownership, easier access to all Challenges Dispersed, audit-driven management system creates overregulation Slow start-up and progress Procurement and state-aid issues What will come after 2020? Reduced budget (Brexit) New, fewer priorities, what are these? SDGs? EFSI (financial engineering) to take over ESIF (grants)? Differentiated treatment of MS?

Foundations for a policy input Statement on future cohesion policy (March 2017) CP to remain expression of EU solidarity Recognition of the growing role of cities Strengthened partnership principle Stronger territorial and functional area approach Simplified rules, subsidiarity, proportionality Reflection of outcomes of the urban agenda

Prospective timeline for post-2020 cohesion policy Proposal on next MFF CP legislative proposal EP elections Cohesion Forum Cohesion report Brexit negotiations Impact assessment with public consultation Legislative negotiations 2017 Mar Apr May June 26-27 Autumn 2018 2019 2020 2021 Statement CP 2020+ Advocacy activities Policy inputs from WGs Consolidated policy paper Publish policy paper