EU STRUCTURAL FUNDS 2014-2020: COMMISSION PROPOSALS November 2011

STRUCTURAL FUNDS: WHAT’S ON THE TABLE? Common Strategic Framework : An EU level “investment policy” to deliver Europe 2020 governing EU Regional Development, Social, Rural Development and  Fisheries Funds.  Partnership Contract : A national ‘business plan’ for investment of EU public funds based on the Common Strategic Framework. All national delivery partners to be bound by the contract, which will regulate payments. Funding to be dependent upon fulfilment of macro-economic, administrative and regulatory ‘conditionalities’, with payments linked to results. 5% ‘performance reserve’ to reward good performance. All regions to receive funding in relation to 3 categories (based on NUTS II boundaries): More developed (regions > 90% of EU average GDP per capita – most of UK) Transition Regions (regions 75% - 90%) Less Developed (regions < 75%) No Member State to receive less than 55% of current allocation (2007-13). Regions moving from Less developed to Transition status to retain at least two thirds of current allocation. Rules simplified and harmonised, with strong emphasis on strong management controls and performance monitoring but proportionate administration and audit. (Seeing is believing!) Programmes to focus on innovation, SME competitiveness, shift to low carbon economy, ICTs, sustainable transport, employment, skills & combating social exclusion. More innovative ‘financial engineering instruments’ (eg revolving loan funds) involving European Investment Bank: fewer grants / more loans. ‘Earmarking’ of funds for specific actions : incl. > 5% for sustainable urban development programmes; >20% ESF for social inclusion, €2.5bn EU topslice from ESF for food for deprived persons and minimum shares for ESF

STRUCTURAL FUNDS BUDGET 2014-2020 Less developed regions 68% of Structural Funds budget; Covering 119.2m people €162.6 bn Transition regions 11.6% of Structural Funds budget; Covering 72.4m people € 38.9 bn More developed regions 15.8% of Structural Funds budget; Covering 307m people € 53.1 bn Territorial cooperation € 11.7 bn Cohesion Fund € 68.7 bn Outermost regions € 0.9 bn Total €336.0bn UK position: Overall the EU budget proposals are too high by approx.€100bn and are inconsistent with stabilisation of the EU budget

LESS DEVELOPED REGIONS GDP/head below 75% EU27 average €162.6 bn EU wide 75%-85% EU co-financing available for wider range of activities Safety net” of 2/3 of previous allocation for regions moving ‘up’ and out of this category At least 25% spend must be from European Social Fund V likely to include West Wales and the Valleys Might include Cornwall and Scilly Isles but unlikely

TRANSITION REGIONS GDP/head between 75% and 90% of EU27average €38.9bn EU wide 60% EU co-financing available for more targeted activities Safety net” of 2/3 of previous allocation for regions moving ‘upwards’ into this category At least 40% SCFs spend must be from European Social Fund, of which 70% must focus on only 4 priorities 80% ERDF to focus on only 3 priorities Could include: Cornwall & Scilly Isles (v likely) Devon Lincolnshire East Yorkshire & N. Lincolnshire Shropshire & Staffordshire South Yorkshire Merseyside Lancashire Tees Valley & Durham Highlands & Islands

MORE DEVELOPED REGIONS (most of UK) GDP/head more than 90% EU27 average €53.1 bn EU wide 50% EU co-financing available At least 52% SCFs spend must be from European Social Fund, of which 80% must focus on only 4 priorities 80% ERDF to focus on only 3 priorities: Innovation SME competitiveness Renewables and energy efficiency (at least 20%)

NEW THEME : CITIES & LOCALISM Member States to ‘list’ cities to be written into Partnership Contract + notional allocations. Integrated programme delivery : at least 5% ERDF (ie c £200m over 7 years?) + social + rural development + fisheries funds via this route? Urban ‘top up’ for cities > 250,000 population extra €4 per person per year based on Eurostat urban audit list. Via Member State allocation? Via national top slice or extra? UK 30 cities do not correspond to UK domestic strategic priorities. Community-led local development through Local Action Groups. European Urban Development Platform: each Member State to nominate 20 cities. Most UK cities are in “More Developed Regions”, so would receive lowest funding & EU intervention levels. Swansea (in a Less Developed Region) will be entitled to 75%-85% EU intervention rates on a wider range of activities. Sheffield, Liverpool, Wirral, Kingston-upon-Hull, Lincoln, Exeter and Stoke are likely to be in Transition regions, so will be entitled to 60% intervention rates. Only Sheffield and Liverpool are English Core Cities.

POLISH PRESIDENCY NEGOTIATIONS TIMELINES General presentation of the cohesion policy package: 12-13 October Phase 1 (mid October – 22 November / tbc) Strategic programming : 20 Oct, 31 Oct, 15 Nov, 22 Nov Thematic concentration : 21 Oct, 7 Nov, 15 Nov, 22 Nov Phase 2 (from mid November) Conditionality : 8 Nov, 21 Nov, 5 Nov Territorial development : 16 Nov, 21 Nov, 6 Dec Presidency seminars: - Strategic Programming :14 Oct - Territorial Development : 9 Nov Urban DGs and Cohesion DGs meeting : 3-4 Nov Cohesion Ministers and Urban Ministers Informal Meeting : 24-25 Nov General Affairs Council on Cohesion Policy : 16 Dec – Council Conclusions

DOMESTIC DECISIONS Integrated EU programmes in the UK? What should be the extent of integration between ERDF, ESF, EAFRD & EMFF? Can we start to identify this on a geographical basis? Focus of UK programmes? What should UK programmes focus on? Core themes across the nations? What metrics of success? Programme design? What required pre-conditions can we accept? Comparable models across UK? Economies of scale? How do we ensure improved accountability as a UK programme yet devolve delivery? What role cities? Which cities should have special status? Do we support integrated urban programmes? What links to EAFRD & EMFF? How many local action groups and where? Impact How do we maximise our use and impact of EU funds? What can we monitor and evaluate UK wide to tell a compelling UK story?