8.3 European Structural and Investment Fund
8.3.1 European policy for 2014-2020
In line with the “Europe 2020 Strategy”, while all regions contribute to the general goal by investing in jobs and growth, the methods and scope of the intervention differ according to the level of economic development of each of them, settling down three categories for such purpose. Based on this premise, regions are divided for this purpose into three different categories:
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The first category relates to “less developed” regions, whose GDP per capita is less than 75% of the average GDP of the EU-2712, which remain an important priority for EU cohesion policy. The community co-financing rate for this group is capped at 75%-85%.
ELEGIBILITY FOR LESS DEVELOPED REGIONS2007-2013 2014-2020 NUTS 2 regions whose GDP per capita is less than 75% of the EU avarage. No change. Transitional support for regions which would have remained eligible for the convergence objective if the threshold remained 75% of the average GDP of EU-15 and not of EU-25. Separate category fro transition regions. Cohesion Fund: Member States whose GNI per capita is less than 90% of the average GNI of EU-27. No change. Transitional support to Member States who would have been eligible for the Cohesion Fund if the threshold remained 90% of average GNI of EU-15 and not of EU-27. Transitional support to Member States eligible for funding from the Cohesion Fund in 2013, but whose GNI per capita exceeds 90% of the average GNI per capita of the EU-27. -
The second category comprises the “transition” regions, which are those whose GDP per capita falls between 75% and 90% of the EU average. In this case, the community co-financing can reach up to 60%.
ELEGIBILITY FOR TRANSITION REGIONS2007-2013 2014-2020 Transitional support for NUTS 2 regions which would have remained eligible for the convergence objective if the threshold remained 75% of the average GDP of EU-15 and not of EU-25 (Convergence phasing-out). NUTS 2 regions whose GDP per capita is between 75% and 90% of the average GDP of EU-27 with a differentiated treatment for regions which are eligible under the Convergence objective in 2007-2013. Transitional support for NUTS 2 regions which were covered by Objective 1 in 2000-2006 but whose GDP exceeded 75% of EU-15 GDP average (RCE phasing-in). - The last are the “more developed” regions, whose GDP per capita is more than 90% of the average. The co-financing rate may not exceed 50%.
Within this framework, the budget established in the Community cohesion policy is distributed as follows:
By country, the budget for the 2014-2020 period is distributed as follows:
For the new 2021-2027 period, the Union’s regional and cohesion policy will focus on five priorities:
- A smarter Europe, through innovation, digitalization, economic transformation and support to small and medium-sized businesses.
- A greener, carbon free Europe, implementing the Paris Agreement and investment in energy transition, renewables and the fight against climate change.
- A more connected Europe, with strategic transport and digital networks.
- A more social Europe, delivering on the European Pillar of Social Rights and supporting quality employment, education, skills, social inclusion and equal access to healthcare.
- A Europe closer to citizens, by supporting locally-led development strategies and sustainable urban development across the EU.
Regional development investments will strongly focus on objectives 1 and 2, while 65% to 85% of ERDF and Cohesion Fund resources will be allocated to the foregoing five priorities, depending on Member States’ relative wealth.
The Cohesion Policy will keep on investing in all regions, still on the basis of the 3 categories applied during the 2014-2020 period (less-developed, transition, more-developed). Similarly, the allocation method for the funds is still largely based on GDP per capita, although new criteria are added, such as youth unemployment, low education level, climate change, and the reception and integration of migrants, to better reflect the reality on the ground. Outermost regions are also expected to continue benefitting from special EU support13.
Lastly, according to available information, the Cohesion Policy will continue to support locally-led development strategies, encouraging local authorities to play a more prominent role in the management of funds. In the same way, the urban dimension of the Cohesion Policy is strengthened with 6% of the ERDF dedicated to sustainable urban development.
Along the same lines, it includes a new networking and capacity-building program for urban authorities known as the “European Urban Initiative”.
8.3.2 Common provisions on the European Structural and Investment Funds (ESI Funds)
Regulation (EU) No 1303/201314 of 17 December lays down common provisions applicable to all of the European Structural and Investment Funds (ERDF, ESF, Cohesion Fund, EAFRD and EMFF) and general provisions applicable to some of them, in order to ensure the effectiveness of the ESI Funds and their coordination with one another and with other EU instruments, notwithstanding the specific rules regulating each Fund and which are set out below.
The purpose of this Regulation is to improve the coordination and harmonize the execution of the Structural Investment Funds (ESI Funds) to ensure “smart, sustainable and inclusive growth” focused on the attainment of eleven thematic objectives:
- Strengthening research, technological development and innovation.
- Enhancing access to, and use and quality of ICT.
- Enhancing the competitiveness of SMEs, of the agricultural sector (for the EAFRD) and of the fishery and aquaculture sector (for the EMFF).
- Supporting the shift towards a low-carbon economy in all sectors.
- Promoting climate change adaptation, risk prevention and management
- Preserving and protecting the environment and promoting resource efficiency.
- Promoting sustainable transport and removing bottlenecks.
- Promoting sustainable and quality employment and supporting labor mobility.
- Promoting social inclusion, combating poverty and any discrimination.
- Investing in education, training and vocational training for skills and lifelong learning.
- Enhancing institutional capacity of public authorities and stakeholders and efficient public administration.
To this end, a Common Strategic Framework (CSF) is created (which can be reviewed by the Commission where there are major changes in the social and economic situation in the Union), setting a number of common recommendations and criteria for those opting for financing from the ESI Funds.
Based on the foregoing premises, the aim of the Funds is to supplement the financing provided through national, regional and local interventions, in order to deliver the “Europe 2020 Strategy”, as well as the objectives specific to each Fund. The Member States, in accordance with their institutional, legal and financial framework, and the bodies designated by them, shall prepare and implement programs and carry out their tasks, in partnership with the relevant partners. To this end, each Member State must promote a partnership in which, in addition to the competent local and regional authorities, with the participation of the following partners:
- Economic and social partners.
- Other bodies representing civil society, including environmental partners, non-governmental organizations and bodies responsible for promoting social inclusion, gender equality and non-discrimination.
With this premise, the Partnership Agreement is the national document prepared by each Member State for the period between January 1, 2014 and December 31, 2020, which explains the investment strategy and priorities of the respective Funds (ERDF, ESF, EAFRD and EMFF) in such State and must be approved by the Commission. Such strategy must be based on a previous analysis of the current situation of the Member State and its regions, in particular (i) the disparities existing between those regions; (ii) the opportunities for growth and (iii) the weaknesses of all its regions and territories, focusing on the “thematic objectives”, which will entail the identification of the actions in the State in question which are to be treated as priorities by each of the ESI Funds.
In the case of Spain, the Partnership Agreement for the period 2014-2020 was approved by the European Commission on November 4, 2014. It establishes as specific objectives of the ESI Funds, in Spain, to promote the competitiveness and the convergence of all territories, giving priority: (i) to the thematic areas included in the recommendations given by the European Council; (ii) to those contained in the Position Paper prepared by the Commission15; as well as (iii) to those set forth in the National Reform Program approved by the Council of Ministers on April 30, 2014.
The Partnership Agreement envisages an investment of 28,580 million euros aimed at financing the entire Community cohesion policy in this country for the period 2014-202016, a figure which must be increased by 8,290 million euros to be used for the performance of Rural Development Programmes and 160 million euros intended for the fisheries and maritime sectors.
This financing is to be used to execute the proposals for action described in the Partnership Agreement in connection with each of the thematic objectives listed above, their main priorities being the following:
- Increasing participation in the labor market and labor productivity, as well as enhancing education, training and social inclusion policies, giving special attention to youth and vulnerable groups.
- Supporting the adaptation of the productive system toward activities with greater added value, by increasing the competitiveness of SMEs.
- Promoting a suitable business environment targeted at innovation and strengthening R&D&I systems.
- Attaining a more efficient use of natural resources.
The material implementation of the Funds, however, requires the approval of the corresponding Operational Programs (i) prepared by each Member State in accordance with the terms of the Partnership Agreement and (ii) presented to the Commission for its approval. Each Program will define priorities and proposals for action, specifying the projected investment and breaking it down by each of the years of the period in which it is applied. In the case of Spain, almost all of the Operational Programs were fully operational following their approval by the European Commission and are no in their last year of implementation17.
8.3.3 Funds under the Cohesion Policy: ERDF, ESF and Cohesion Fund
The Funds under the Cohesion Policy include Structural Funds (ERDF and ESF) and the Cohesion Fund, which contribute to enhancing economic, societal and territorial cohesion. The Community cohesion policy pursues two objectives:
- Investment in growth and jobs in Member States and their regions:
The resources for this objective amounted to 97% of the projected total investment in Spain (approximately 28.58 billion euros) and were allocated as follows:
- 2 billion euros to less developed regions (Extremadura).
- 13.4 billion euros to transition regions (Andalucía, Canary Islands, Castilla-La Mancha, Melilla and Murcia).
- 11 billion euros to more developed regions (Aragón, Asturias, Balearic Islands, Cantabria, Castilla y León, Cataluña, Ceuta, Valencia, Galicia, La Rioja, Madrid, Navarra, Basque Country)
- 484.1 million euros as special funding for the outermost regions (Canary Islands).
- European Territorial Cooperation:
The resources earmarked for this objective represented approximately 3% of the total resources allocated to Spain with a charge to the ESI Funds during the entire 2014-2020 period (i.e., a total of 643 million euros).
In summary, the articulation of the Cohesion Policy during this new budgetary period was instrumented according to the following scheme:
COHESION POLICY ARCHITECTURE2007-20132014-2020Objectives Goals Category of regions Funds Convergence ERDF
ESFInvestment in Growth and Jobs LEss developed regions ERDF
ESFConvergence phasing out Transition regions Regional Competitiveness and Employment Phasing in Cohesion Fund Cohesion Fund Regional Competitivenes and Employment ERDF
ESFMore developed regions ERDF
ESFEuropean Territorial Cooperation ERDF European Territorial Cooperation ERDF Based on the foregoing premises, the following is a description of the main characteristics of the Structural Funds (ERDF and ESF) and the Cohesion Fund:
- European Regional Development Fund (ERDF)
This Fund contributes to the funding of measures adopted in order to enhance economic, societal and territorial cohesion by correcting the Union’s main regional imbalances, through (i) sustainable development and the structural adjustment of regional economies, and (ii) by restructuring industrial regions in decline and less developed regions.
The activities that can be cofinanced by the ERDF are the following:
- Investments in production which contribute to creating or preserving long-term employment, through direct aid and investment in SMEs.
- Productive investments, independent of the size of the company in question, which contribute to boosting research, technological development and innovation and to supporting a shift towards a low-carbon economy in all sectors. Also, where such investment entails cooperation between large companies and SMEs to enhance access to, and use and quality of information and communication technologies.
- Investments in infrastructures that provide basic services to citizens in the areas of energy, environment, transportation and information and communication technologies.
- Investments in societal, health, research, innovation, business and educational infrastructures.
- Investment in the development of native potential through ongoing investments in capital goods and small infrastructures, including small cultural and sustainable tourist infrastructures, corporate services, aid to research and innovation bodies and investment in technology and applied research at companies.
- Interconnection online, cooperation and exchange of experiences between competent regional, local, urban and other public authorities, economic and social partners and the related bodies representing civil society referred to in article 5.1 of Regulation (EU) No 1303/2013, as well as the performance of studies, preparatory actions and the development of capacities.
However, the following activities are not eligible for funding under this Fund (i) disassembly or construction of nuclear power plants; (ii) investments aimed at reducing greenhouse gas emissions pursuant to Annex 1 of Directive 2003/87/EC; (iii) manufacture, processing and marketing of tobacco and manufactured tobacco; (iv) enterprises in crisis; as well as (v) in general, investments in airport infrastructures, unless they are related to environmental protection or are accompanied by the investments necessary to mitigate or reduce their negative impact on the environment.
Although the ERDF Fund contributes to financing the eleven thematic objectives described above, it is targeted at the priority attainment of Objectives nos. 1 through 4, more related to the business context (infrastructures, service enterprises, support for corporate activities, innovation, CIT and research) as well as to the provision of services to citizens in certain areas (energy, online services, education, health, societal and research infrastructures, accessibility, environmental quality).
Source: http://ec.europa.eu/regional_policy/sources/docgener/infographic/cohesion_policy_20142020_es.pdfDuring the 2014-2020 period Spain has been managing the 22 Operational Programmes co-financed by the ERDF, which represented a budget of €19,408,883,778, pursuant to the Partnership Agreement approved by the European Commission.
Under the Objective entitled “Investment in growth and jobs”, the ERDF will use the respective Operating Programmes to support sustainable urban development through strategies which establish measures to meet economic, environmental, climate, demographic and societal challenges with an impact on urban areas, also bearing in mind the need to promote the relationship between the urban and rural environments. For such purpose, at least 5% of the resources of the ERDF assigned at national level will be used for sustainable urban development.
The Partnership Agreement signed by Spain and the European Commission also includes a specific reference to the attainment of the “Investment in growth and jobs” objective, through which financing will be obtained for a number of proposals targeted at promoting the development of cities from a threefold perspective: (i) sustainable city (aimed at enhancing the physical and environmental dimension); (ii) smart city (aimed at enhancing the economic and competitiveness dimension); and (iii) inclusive city (aimed at enhancing the social dimension).
Lastly, under the Objective “European Territorial Cooperation”, the ERDF will support:
- Cross-border cooperation between adjoining regions aimed at favoring regional development between regions with terrestrial and maritime borders between two or more Member States or with a third country on the Union’s outer borders.
It is sufficient to indicate, in this connection, that Spain participates in the following cross-border cooperation programs:
- Territorial Cooperation Programme Spain-France-Andorra (POCTEFA) 2007-2013.
- INTERREG V A Cooperation Programme Spain-Portugal (POCTEP) 2014-2020.
- European Neighbourhood Instrument Cross-border Cooperation Programme (ENI-CBC).
- INTERACT III.
- Transnational cooperation in large transnational areas in which national, regional and local partners participate and which also includes maritime cross-border cooperation in the cases not covered by cross-border cooperation, with a view to attaining a higher degree of territorial integration in those territories.
Spain participates in the following transnational cooperation programs:
- Madeira-Azores-Canary Islands Territorial Cooperation Programme (POMAC) 2014-2020.
- Atlantic Area European Territorial Cooperation Programme (2014-2020).
- INTERREG V B MED Programme.
- Southwest Europe Interreg V-B Transnational Cooperation Programme (Interreg V-B SUDOE).
- Interregional cooperation to enhance the efficiency of the cohesion policy, its scope of application being the entire territory of the EU.
Spain participates in the following Interregional Cooperation Program:
- INTERREG EUROPE.
For more information on the foregoing programmes, please visit the website of the Ministry of Finance: https://www.dgfc.sepg.hacienda.gob.es/sitios/dgfc/es-ES/ipr/fcp0713/p/poct/Paginas/inicio.aspx
- European Social Fund (ESF)
The mission of the ESF is (i) to promote high levels of job quality; (ii) improve access to the job market; (iii) foster the geographical and professional mobility of workers; (iv) facilitate their adaptation to the industrial change and to the changes in production systems necessary to guarantee sustainable development; (v) favor a high level of education and training for all and support the transition from education to employment among youth; (vi) combat poverty, back social inclusion and (vii) foster equality between the sexes, non-discrimination and equal opportunity. The objective of all of the foregoing is to respond to the EU’s priorities in matters of improving economic, societal and territorial cohesion.
In short, the Fund seeks to benefit citizens and, in particular, disadvantaged persons, such as long-term unemployed persons, disabled persons, immigrants, ethnic minorities, outcast communities and persons of any age living in poverty and social exclusion.
The ESF also provides aid to workers and to enterprises (including agents of the social economy and entrepreneurs) with a view to (i) facilitating their adaptation to new challenges, by including greater suitability of professional qualifications; (ii) fostering good governance; (iii) boosting social progress and (iv) the implementation of reforms, especially in the area of employment, education, training and social policies.
Similarly, the European Parliament, in its Resolution of July 5, 2016, stressed that professional integration is the first step towards social inclusion and that the ESF can therefore be applied to for the financing of measures designed to facilitate the integration of refugees.
Source: http://ec.europa.eu/regional_policy/sources/docgener/infographic/cohesion_policy_20142020_es.pdfAlthough the ESF is aimed at attaining specifically the following four investment priorities of the aforesaid eleven “thematic objectives” (i.e., objectives 8 through 11), such as (i) employment and labor mobility; (ii) education, skills and lifelong learning; (iii) promoting social inclusion and combating poverty; and (iv) enhancing institutional capacity], this does not mean that the initiatives supported by the ESF cannot also contribute to the achievement of other Objectives.
According to the terms of the Partnership Agreement executed between Spain and the Commission, Spain has been managing 23 Operational Programmes with ESF with minimum co-financing of 7.6 billion euros (28.1% of the total budgets of the Cohesion Policy), without counting the budget to be used for the Youth Employment Initiative.
The regions eligible for funding under the Youth Employment Initiative are:
In particular, in connection with the youth employment initiative, Spain was allocated an additional 943.5 million euros to be used to back the fight against youth unemployment among youths under 25 years of age who are not integrated in educational or training systems and are inactive or unemployed.
- Cohesion Fund
The Cohesion Fund is targeted at Member States with GNI (gross national income) per capita of less than 90% of the average income of the EU. The primary objective of the Fund is to reduce the socio-economic disparities among Member States and to promote sustainable development.
The Cohesion Fund allocates a total of 63.4 billion euros to finance projects carried out in the following categories:
- Trans-European transport networks: In particular priority projects of European interest identified by the EU. The Cohesion Fund backs infrastructure projects in the context of the “Connecting Europe Facility”.
- Environment: In this area, the Cohesion Fund will support projects relating to energy or transport, provided that they are clearly beneficial to the environment in terms of energy efficiency, using renewable energies, developing rail transport, enhancing intermodality, strengthening public transport, etc.
As indicated, the Cohesion Fund is currently subject to the same programming, management and supervisory rules as the ERDF and the ESF under Regulation (EU) No 1303/2013 of the European Parliament and of the Council of 17 December 2013 laying down common provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund, the European Agricultural Fund for Rural Development and the European Maritime and Fisheries Fund and repealing Council Regulation (EC) No 1083/2006.
During the 2014-2020 period, the Cohesion Fund may finance projects and initiatives taking place in Bulgaria, Croatia, Cyprus, Slovakia, Slovenia, Estonia, Greece, Hungary, Latvia, Lithuania, Malta, Poland, Portugal, the Czech Republic and Romania. Accordingly, during this period Spain did not receive financing from this Fund.
ANNUAL BREAKDOWN OF COMMITTED CREDITS FOR THE 2014-2020 PERIOD
MILLION EUROS - CURRENT PRICES2014 2015 2016 2017 2018 2019 2020 TOTAL 36,196 60,320 50,837 52,461 54,032 55,670 57,275 366,791 Source: COM (2015) 320 final. Communication from the Commission to the Council and to the EP on technical ajustment to the MFF for 2016
Source: http://www.congreso.es/docu/pge2016/pge2016/PGE-ROM/doc/L_16_A_A6.PDF
- European Regional Development Fund (ERDF)
12Based on figures previous to the entry of Croatia in July 2013
13Source: https://www.dgfc.sepg.hacienda.gob.es/sitios/dgfc/es-ES/ipr/fcp2020/Paginas/inicio.aspx y https://ec.europa.eu/regional_policy/es/2021_2027/.
14This Regulation was recently amended by Regulation 2020/460 of the European Parliament and of the Council of 30 March 2020, with a view to establishing specific measures to address the “exceptional situation” resulting from the “consequences of the COVID-19 outbreak” (Recital One). In general, these are amendments aimed at providing more flexibility to Member States for compliance with certain conditions or requirements regarding the use of the funds to attend to needs resulting from the pandemic.
Specifically, please note the following examples:
- The ERDF is modified so as to permit the financing of working capital in small and medium-sized enterprises where necessary as a temporary measure to provide an effective response to a public health crisis.
- Member States are given more flexibility for program implementation, as well as a simplified procedure not requiring a Commission Decision for changes for operational programs, the ultimate purpose being to offer greater flexibility with which to confront the COVID-19 outbreak.
In turn, the Commission also approved Regulation (EU) 2020/558 of the European Parliament and of the Council of 23 April 2020 amending Regulations (EU) No 1301/2013 and (EU) No 1303/2013 as regards specific measures to provide exceptional flexibility for the use of European Structural and Investment Funds in response to the COVID-19 outbreak (OJEU of April 24 2020).
In particular, Member States are given the exceptional possibility of requesting the application, for programs included in the Cohesion Policy, of a co-financing rate of 100% of the expenditure declared in payment applications during the accounting year starting 1 July 2020 and ending 30 June 2021 for one or more priority axes in a program supported by the European Regional Development Fund (ERDF), the European Social Fund (ESF) or the Cohesion Fund (CF).
Please also note that resources available for programming for the year 2020 for the investment for growth and jobs goal may, at the request of a Member State, be transferred between the ERDF, the ESF and the Cohesion Fund (although they cannot affect resources allocated to the Youth Employment Initiative or to the aid for the most deprived under the investment for growth and jobs goal).
Lastly, the resources available for programming for the year 2020 may, at the request of a Member State, be transferred between categories of regions in response to the COVID-19 outbreak.
15Report on the Position of the Commission Services on the development of a Partnership Agreement and Programmes in SPAIN for the period 2014-2020. October 2012.
16Including the financing of European territorial cooperation and the allocation for the youth employment initiative.
17In this line, the ERDF Regional Operational Programs were approved for all of the regions of Spain, as have the Multi-regional and the Territorial Cooperation Operational Programs of the same Fund; two of the ESF Operational Programs have also been approved. Approval has also been given for the Operational Program for Spain of the European Maritime and Fisheries Fund and the EAFRD. Spain no longer has access in this period to the Cohesion Fund.
