ESF Technical Working Group Brussels, 5 October 2017 Update on the Mid-Term Review (MTR) Package on the Multiannual Financial Framework (MFF) ESF Technical Working Group Brussels, 5 October 2017

I. Overview trilogues and technical meetings so far CPR 12.09: 1st Trilogue: Provisions not related to financial instruments 25.09: Technical meeting: Follow-up 1st trilogue and visibility provisions 3.10: 2nd Trilogue: Provisions related to financial instruments 4.10: 3rd Trilogue: Provisions not related to financial instruments ESF 25.09: 1st Trilogue 28.09: Technical meeting

II. Outcome of discussions on the CPR (1) Agreement on: References to the Financial Regulation Definition of macro-regional strategy (Art. 2(31): agreement on Council drafting as no obligation can be imposed on European Council to provide guidance Priorities of ESI Funds to cover their appropriate use in the area of asylum and migration (Art. 9 - new subparagraph): coordination requirement with the AMIF added following an EP amendment Procedure for the annual update of the Partnership Agreement following approval of OP amendments constituting approval of the corresponding PA amendments (New Art. 16(4a))

II. Outcome of discussions on the CPR (2) Agreement on: Transfer of part of the ESI Funds resources to other Union instruments or to enhance the risk-bearing capacity of the EFSI (Art. 30a): deleted, but to be looked at again as linked to Art. 125 Financial Regulation Some provisions on CLLD and ITIs (Art. 32(4), 34(3)(a) to (e) and 36(3)) Technical assistance at the initiative of the Commission (Art. 58): operational or administrative expenditure Technical assistance at the initiative of Member States: each ESI Fund may support TA operations eligible under any of the other ESI Funds (Art. 59 (1a)) and possibility to have direct awards to EIB, publicly owned bank and IFI of which MS is a member (Art. 59 (3))

II. Outcome of discussions on the CPR (3) Further discussion needed on: Definition of beneficiary (Art. 2(10)): may need to be revisited CLLD – Tasks of Local Action Groups (LAG) (Art. 34(3)(f)): Obligation for the LAG to present the proposals for selection to the body responsible for final verification of eligibility: always or only 'where appropriate' ? Operations generating net revenue after completion (Art. 61): Cost-savings resulting from energy efficiency measures: not treated as net revenue Non-applicability of the provision for all operations subject to State aid rules Visibility of the ESI Funds – multiple EP amendments including minimum spending (O.25%) of technical assistance on communication measures: Commission drafting suggestions striking a balance between achieving increased visibility without additional administrative burden, but making already existing obligations more explicit. Council opposed to the earmarking of TA funds for communication

III. Outcome of discussions on the ESF (1) Agreement on: Deletion of the household indicators Further discussion needed on: Eligibility depending on location (Art. 13(2)): pro rata based on objective criteria (reflecting the benefits?) linked to Art. 70 CPR SCO provisions initially limited to the ESF, but now moved to the CPR (Art. 14(2) and (4)): 40% flat rate on direct eligible staff costs covering the remaining eligible costs of the operation (Art. 68b) Mandatory use of SCOs (Art. 67(2a)) EP wants to maintain (at least) a cross-reference to the new provisions in the CPR. Use of a draft budget to establish a SCO: increase of the ceiling from 100 000 to 150 000 (Art. 14(3)) – Provision now moved to the CPR (Art. 67(5)(a)(iv)), but no increase was requested by the REGI Committee

III. Outcome of discussions on the ESF (2) Further discussion needed on: The requirement that financial audit under Art. 14(1) ESF may not delay the steps in the funding allocation process: EP amendment Derogation procedure to EP and Council on the ceilings for de minimis aid and for the public support: EP amendment

III. Outcome of discussions on the ESF (3) Commission suggestion on the YEI: In agreement with the Commission, Member States may decide to allocate a limited amount not exceeding 10 % of the funds under the YEI to young persons residing in sub-regions which experience high youth unemployment levels and which are outside the eligible NUTS level 2 regions or to young disadvantaged persons not in employment, education or training residing outside the eligible NUTS level 2 regions.

IV. Next steps CPR Trilogues 10.10: Financial instruments 11.10: Remaining provisions not related to financial instruments 17.10: Recitals 24.10: Back up option ESF Trilogues 12.10 18.10: to be confirmed Final trilogue on the entire Omnibus Regulation: November Entry into force: 1.01.2018

Thank you!