REPORT on the proposal for a regulation of the European Parliament and of the Council amending regulation (EC) No 1083/2006 concerning general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund as regards simplification of certain requirements and as regards provisions relating to financial management

23.3.2010 - (COM(2009)0384 – C7‑0003/2010 – 2009/0107(COD)) - ***I

Committee on Regional Development
Rapporteur: Evgeni Kirilov

DRAFT EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION

on the proposal for a regulation of the European Parliament and of the Council amending regulation (EC) No 1083/2006 concerning general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund as regards simplification of certain requirements and as regards provisions relating to financial management

(COM(2009)0384 – C7‑0003/2010 – 2009/0107(COD))

(Ordinary legislative procedure: first reading)

The European Parliament,

–   having regard to the proposal for a regulation (COM(2009)0384),

–   having regard to Article 161 of the EC Treaty, pursuant to which the Commission submitted the proposal to Parliament (C7‑0003/2010),

–   having regard to the Communication from the Commission to the European Parliament and the Council entitled "Consequences of the entry into force of the Treaty of Lisbon for ongoing interinstitutional decision-making procedures" (COM(2009)0665),

–   having regard to Article 294(3) and Article177 of the Treaty on the Functioning of the European Union,

–   having regard to the opinion of the Economic and Social Committee,

–   after consulting the Committee of the Regions,

–   having regard to Rule 55 of its Rules of Procedure,

–   having regard to the report of the Committee on Regional Development and the opinions of the Committee on Budgets and the Committee on Employment and Social Affairs (A7‑0055/2010),

1.  Adopts the position at first reading hereinafter set out;

2.  Calls on the Commission to refer the matter to Parliament again if it intends to amend its proposal substantially or replace it with another text;

2.  Instructs its President to forward its position to the Council, to the Commission and to the national parliaments.

Amendment  1 Proposal for a regulation – amending act Recital 9
Text proposed by the Commission	Amendment
(9) The scope of the provision on the durability of operation should be clarified. It is appropriate, in particular, to limit the provisions to those operations co-financed by the ESF that fall under the state aid rules with an obligation to maintain investment or jobs created. Furthermore, it is necessary to exclude the application of that provision to those operations where, after their completion, they undergo a substantial modification through a cessation of productive activity due to a non fraudulent bankruptcy.	(9) The scope of the provision on the durability of operation should be clarified. It is appropriate, in particular, to limit the provisions to those actions within the scope of assistance from the ESF that fall under the state aid rules with an obligation to maintain investment. Furthermore, it is necessary to exclude the application of that provision to those operations where, after their completion, they undergo a substantial modification through a cessation of productive activity due to a non fraudulent bankruptcy.
Amendment  2 Proposal for a regulation – amending act Recital 11
Text proposed by the Commission	Amendment
(11) As outlined in the Communication of the Commission of June 3 June 2009 on "A Shared Commitment for Employment", in order to counteract cash flow problems occurring in Member States as a result of financial constraints during the peak of the crisis and in order to speed up the implementation of active labour market measures aiming at supporting citizens and more specifically the unemployed or those at risk of unemployment, it is necessary to modify for a limited period of time the provisions concerning the calculation of interim payments. For this reason it is appropriate, without altering the national co-funding obligations which apply to operational programmes over the whole programming period, for the Commission to reimburse, where Member States so request, interim payment claims at 100% of the public contribution to each priority axis in operational programmes co-financed by the ESF.	deleted
Amendment  3 Proposal for a regulation – amending act Recital 12a (new)
Text proposed by the Commission	Amendment
	(12a) Due to exceptional circumstances and given the serious and unprecedented impact of the current economic and financial crisis on the budgets of Member States, an additional pre-financing instalment for 2010 is needed for the Member States worst hit by the crisis in order to allow for a regular cash flow and to facilitate payments to beneficiaries during programme implementation.
Amendment  4 Proposal for a regulation – amending act Recital 14a (new)
Text proposed by the Commission	Amendment
	(14a) It is appropriate to extend the deadline for the calculation of the automatic decommitment of the annual budget commitment related to 2007 total annual contribution to improve the absorption of funds committed for certain operational programmes. Such flexibility is necessary due to slower than expected start up and late approval of the programmes.
Amendment  5 Proposal for a regulation - amending act Recital 20 a (new)
Text proposed by the Commission	Amendment
(20a) Following, inter alia, the change in the decision-making process resulting from the entry into force of the Lisbon Treaty, amendments provided for by this Regulation have not been introduced in time to prevent the application of current Article 93(1) of Regulation 1083/2006. Consequently, decommitments made by the Commission would result, pursuant to Article 11 of Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities 1 (the Financial Regulation) in cancelling appropriations of financial year 2007 which should be spread over the financial years 2008 to 2013 in implementation of the rules introduced by this Regulation. It is therefore appropriate, as a transitory measure, to provide for the possibility to reconstitute, as necessary, the corresponding appropriations for the purposes of implementing the amended decommitment rules.,   1 OJ L 248, 16.9.2002, p. 1.
Amendment  6 Proposal for a regulation – amending act Article 1 – point 4 – point a Regulation (EC) No 1083/2006 Article 44 – paragraph 1 – point c
Text proposed by the Commission Amendment c) funds or other incentive schemes providing loans, guarantees for repayable investments, or equivalent instruments for energy efficiency and use of renewable energy in buildings, including existing housing. (c) funds or other incentive schemes providing loans, guarantees for repayable investments or equivalent instruments, for energy efficiency and use of renewable energy in buildings, including in existing housing.
Amendment  7 Proposal for a regulation – amending act Article 1 – point 4 – point b Regulation (EC) No 1083/2006 Article 44 – paragraph 2 –introductory part
Text proposed by the Commission Amendment When such operations are organised through holding funds, that is, funds set up to invest in several venture capital funds, guarantee funds, loan funds, urban development funds, funds or other incentive schemes providing loans, guarantees for repayable investments, or equivalent instruments for energy efficiency and use of renewable energy in buildings, including existing housing, the Member State or the managing authority shall implement them through one or more of the following forms: When such operations are organised through holding funds, that is, funds set up to invest in several venture capital funds, guarantee funds, loan funds, urban development funds, funds or other incentive schemes providing loans, guarantees for repayable investments or equivalent instruments, for energy efficiency and use of renewable energy in buildings, including in existing housing, the Member State or the managing authority shall implement them through one or more of the following forms:
Amendment  8 Proposal for a regulation – amending act Article 1 – point 7 Regulation (EC) No 1083/2006 Article 56 – paragraph 3 – subparagraph 2
Text proposed by the Commission Amendment Where a category of expenditure is added at the moment of the revision of an operational programme referred to in Article 33, any expenditure falling under such category shall be eligible from the date of the submission to the Commission of the request for revision of the operational programme. Where a new category of expenditure as referred to in Table 1 of Part A of Annex II to Commission Regulation (EC) No 1828/20061 is added at the moment of the revision of an operational programme referred to in Article 33 of this Regulation, any expenditure falling under such category shall be eligible from the date of the submission to the Commission of the request for revision of the operational programme.   1 OJ L 371, 27.12.2006, p. 1.
Amendment  9 Proposal for a regulation – amending act Article 1 – point 8 – point a Regulation (EC) No 1083/2006 Article 57 – paragraph 1 – subparagraph 2
Text proposed by the Commission Amendment Operations receiving contribution from the ESF shall be considered as not having retained the contribution only where they are subject to an obligation for maintenance of investment under the rules on state aid within the meaning of Article 87 of the Treaty and where they undergo a substantial modification caused by the cessation of productive activity within the period laid down in those rules. Actions falling within the scope of assistance from the ESF shall be considered as not having retained the contribution only where they are subject to an obligation for maintenance of investment under the applicable rules on state aid within the meaning of Article 107 of the Treaty on the Functioning of the European Union and where they undergo a substantial modification caused by the cessation of productive activity within the period laid down in those rules.
Amendment  10 Proposal for a regulation – amending act Article 1 – point 8 – point a Regulation (EC) No 1083/2006 Article 57 – paragraph 1 – subparagraph 3
Text proposed by the Commission Amendment Member States may reduce the time limits set out in the first subparagraph to three years in case of the maintenance of an investment or jobs created by SMEs. Member States may reduce the time limits set out in the first subparagraph to three years in case of the maintenance of an investment by SMEs.
Amendment  11 Proposal for a regulation – amending act Article 1 – point 9 Regulation (EC) No 1083/2006 Article 67 – paragraph 2 – point b – point ii
Text proposed by the Commission Amendment (ii) the rate of the total amount of certified eligible expenditure paid by the beneficiaries and the total funding of the programme including Community funding and national counterpart; (ii) the ratio between the total amount of certified eligible expenditure paid by the beneficiaries and the total funding of the programme including Community funding and national counterpart;
Amendment  12 Proposal for a regulation – amending act Article 1 – point 10 Regulation (EC) No 1083/2006 Article 77
Text proposed by the Commission Amendment (10) Article 77 is replaced by the following: deleted "Article 77 Common rules for calculating interim payments and payments of final balance   1. Interim payments and payments of the final balance shall be calculated by applying the co-financing rate laid down in the decision on the operational programme concerned for each priority axis to the eligible expenditure mentioned under that priority axis in each statement of expenditure certified by the certifying authority.   However the Community contribution through the interim payments and payments of the final balance shall not be higher than the public contribution and the maximum amount of assistance from the Funds for each priority axis as laid down in the decision of the Commission approving the operational programme.   2. By way of derogation from the first subparagraph of paragraph 1, in the case of operational programmes co-financed by the ESF, interim payments by the Commission for statements of expenditure sent by the Member States by 31 December 2010 may, if a Member State so requests in order to facilitate implementation of anti-crisis measures, be made by paying 100% of the public contribution for each priority axis as mentioned under that priority axis in the statement of expenditure certified by the certifying authority. Where the Member State chooses this option, the Commission shall apply this system to all interim payments requests sent by 31 December 2010 for the given operational programme.   The difference between the total amount paid under the first sub-paragraph and the amount calculated under the first subparagraph of paragraph 1 shall not be taken into account to calculate interim payments for statements of expenditure sent after 31 December 2010. However, this difference shall be taken into account for the purpose of the provision under Article 79(1) and for the calculation of the payment of the final balance.
Amendment  13 Proposal for a regulation – amending act Article 1 – point 11 a (new) Regulation (EC) No 1083/2006 Article 82 – paragraph 1 (new)
Text proposed by the Commission Amendment   (11a) Article 82(1) is amended as follows:   (a) in the second subparagraph, the following point is added:   "(ea) for Member States that were granted loans in 2009 in accordance with Council Regulation (EC) No 332/2002 of 18 February 2002 establishing a facility providing medium-term assistance for Member States' balances of payments 1, or, Member States with a GDP decrease in 2009 of more than 10 % in real terms in comparison to 2008: in 2010, 2 % of the contribution from the Cohesion Fund and 4 % of the contribution from the European Social Fund to the operational programme.   1 OJ L 53, 23.2.2002, p. 1."   (b) the following subparagraph is added   "For the purpose of applying the criteria referred to in point (ea) of the second subparagraph, GDP figures shall be based on Community statistics published in November 20092.   2 European Economic Forecast Autumn 2009 (EUROPEAN ECONOMY. No. 10. 2009. Office for Official Publications of the EC. Luxembourg)."
Amendment  14 Proposal for a regulation – amending act Article 1 – point 12 Regulation (EC) No 1083/2006 Article 88 – paragraph 3 – subparagraph 2
Text proposed by the Commission Amendment However, in cases where the irregularities in operations which have been subject to a declaration of partial closure are detected by controls carried out by the Member State, Article 98(2) and (3) shall apply. The statement of expenditure referred to in point (a) of paragraph 2 of this Article shall be adjusted accordingly. However, in cases where the irregularities in operations which have been subject to a declaration of partial closure are detected by the Member State, Article 98(2) and (3) shall apply. The statement of expenditure referred to in point (a) of paragraph 2 of this Article shall be adjusted accordingly.
Amendment  15 Proposal for a regulation – amending act Article 1 – point 12 a (new) Regulation (EC) No 1083/2006 Article 93 – paragraph 1 and paragraph 2 a (new)
Text proposed by the Commission Amendment   (12a) Article 93 is amended as follows:   (a) paragraph 1 is replaced by the following:   "1. The Commission shall automatically decommit any part of the amount calculated in accordance with the second subparagraph in an operational programme that has not been used for payment of the pre-financing or interim payments or for which an application for payment has not been sent in conformity with Article 86 by 31 December of the second year following the year of budget commitment under the programme, with the exception mentioned in paragraph 2.   For the purpose of the automatic decommitment, the Commission shall calculate the amount by adding one sixth of the annual budget commitment related to 2007 total annual contribution to each of 2008 to 2013 budget commitments."   (b) the following paragraph is inserted after paragraph 2:   "2a. By way of derogation from the first subparagraph of paragraph 1 and from paragraph 2, the deadlines for automatic decommitment shall not apply to the annual budget commitment related to 2007 total annual contribution."
Amendment  16 Proposal for a regulation – amending act Article 1 a (new)
Text proposed by the Commission	Amendment
	Article 1a Transitional measures
	In order to meet the exceptional circumstances of the transition to the decommitment rules introduced by this Regulation, appropriations which have been cancelled because of decommitments made by the Commission for the financial year 2007 in the implementation of the first subparagraph of Article 93(1) and Article 97 of Regulation 1083/2006, pursuant to Article 11 of the Financial Regulation, shall be reconstituted to the extent necessary for the implementation of the second subparagraph of Article 93(1) of Regulation 1083/2006.
Amendment  17 Proposal for a regulation – amending act Article 2 – paragraph 2
Text proposed by the Commission	Amendment
However, points (5) and (7) of Article 1 shall apply from 1 August 2006, points (8), (11)(a), (11)(b)(i) and (13) of Article 1 shall apply from 1 January 2007 and points (4), (11)(b)(ii) and (11)(c) of Article 1 shall apply with effect from 10 June 2009.	However, points (5) and (7) of Article 1 shall apply from 1 August 2006, points (8), (10)(a), (10)(b)(i),(13) and (14) of Article 1 shall apply from 1 January 2007 and points (4), (10)(b)(ii) and (10)(c) of Article 1 shall apply with effect from 10 June 2009.

OPINION of the Committee on Budgets (17.3.2010)

for the Committee on Regional Development

on the proposal for a Council regulation amending Regulation (EC) N° 1083/2006 concerning general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund as regards simplification of certain requirements and as regards certain provisions relating to financial management
(COM(2009)0384 – C7‑0003/2010 – 2009/0107(COD))

Rapporteur: Ivars Godmanis

SHORT JUSTIFICATION

In July 2009, the Commission presented a proposal amending the basic regulation on structural funds, Regulation (EC) 1083/2003. The aim of the proposal was to provide additional economic stimulus to certain Member States, which had seriously suffered from the economic crises. It followed the European Economic Recovery Plan, in the context which the implementing provisions of the basic regulation 1083/2006 had already been modified in 2009 to allow more flexibility with advance payments.

The main element of the Commission proposal aimed to address consequences of the financial crisis, i.e. the problem of a tightened credit policy and the constraints on the budgetary policy. The solution proposed was to introduce a temporary option for Member States suffering from severe cash-flow difficulties to have a possibility to request a 100% reimbursement for financing labour market measures under the European Social Fund, i.e. derogation from the principle of co-financing. This exception was foreseen to be applicable in 2009 and 2010 and was expected to boost training, upgrading of skills and the provision of high-quality apprenticeships. Moreover, the Commission proposed a number of measures to further simplify the implementation of Regulation (EC) 1083/2006.

The Council considered the proposal in the autumn 2009 and reached a unanimous position on 20 November. It rejected the idea of temporary 100% payments, but endorsed other changes proposed by the Commission.

The entry into force of the Lisbon Treaty on 1 December 2009 entailed a change in the legislative procedure to Parliament's benefit: instead of the assent procedure, where Parliament was only able to say yes or no, Parliament acquired a full say in the content of the text in the ordinary legislative procedure.

Consideration of the budgetary aspects of the proposal

The Commission has proposed a number of changes which aim at simplifying the rules on the implementation of structural funds. The most tangible changes relate to major projects, including the threshold that is being applied. If the proposal is adopted, one single threshold, EUR 50 million, is applicable to all major projects (currently, there is a separate threshold for environmental projects, EUR 25 million). Moreover, major projects should also be protected from automatic de-commitment. Most of the other changes are fairly small, but they do respond to Parliament's calls for simplification, like those made in the budget conciliation in November 2009. The Parliament and the Council then adopted a joint declaration on the simplification and more targeted use of Structural Funds. Therefore, the simplification measures proposed by the Commission can be supported.

A more complicated problem relates to the proposal to waive temporarily the obligation of co-financing for operational programmes financed by ESF. It would not have any impact on commitment appropriations in 2010, but it would increase temporarily the payment appropriations, should Member States decide to use the opportunity for 100% reimbursement of the interim payments. The proposal would not entail any modification of the multiannual financial framework, because the 'extra' payments by the EU in 2010 would be recuperated when calculating the payment of final balance.

While the overall aim – the mobilisation of structural funds to better address the economic and financial crises – is fully compatible with Parliament’s position, the method proposed by the Commission leaves room for doubt. Statistics on the evolution of payments in structural funds show considerable differences between Member States, in particular as regards the ESF (see annex 1). The same applies to the submission of descriptions for Management and Control Systems. The data available implies that the problems lay elsewhere than in finding co-financing, i.e. in Member States capacity to manage the funds at national level. A full, temporary financing by the EU would be against the principle of co-financing and could increase the risk for irregularities. The additional cost of the Commission proposal would be EUR 4.1 billion in 2010. That would mean an increase of 50% to the budgeted ESF payments in 2010.

It is unfortunate that the Commission proposal does not contain an impact assessment. It is not clear what the expected impacts are and what the real added value would be.

The Council has already rejected the principle of 100% financing. Instead, it has proposed the extension of the deadline for calculating the automatic de-commitment of the annual budget commitment related to 2007 total annual contribution to improve the absorption of funds committed for certain operational programmes. It argues that such flexibility would be needed due to a slower than expected start-up and late approval of the operational programmes.

Moreover, to mitigate the economic situation in countries most seriously affected by economic crises, the Council also proposes to increase advance payments to operational programmes of ESF and for Cohesion Fund. Member States that have been granted medium-term financial assistance in accordance with Regulation (EC) 332/2002 and Member States with a GDP decrease in 2009 of more than 10% compared to 2008, would be eligible for an extra pre-financing of 2% from Cohesion Fund and 4% from ESF. This proposal would mean the extension of advance payments, under the abovementioned conditions, to 2010. Under the current regulation, no advance payments were foreseen for 2010.

Your rapporteur for opinion points out that five countries would benefit from the Council proposal on advance payments (see annex 2). The total cost of this measure would be EUR 0.776 billion (EUR 0.4 billion for Cohesion Fund and EUR 0.3776 billion for ESF).

Your rapporteur for opinion considers that the Council approach responds to Parliament's demands on simplification and flexibility. All countries would potentially benefit from the postponement of de-commitment, but those countries in the most difficult situation would benefit from extra advance payments. The amendments tabled by your draftsman reflect this position. It goes without saying, however, that after the adoption of the legal base, the Commission should make a corresponding proposal for an amending budget for the consideration and adoption by the budgetary authority.

AMENDMENTS

The Committee on Budgets calls on the Committee on Regional Development, as the committee responsible, to incorporate the following amendments in its report:

Amendment  1 Draft legislative resolution Paragraph 1 a (new)
Draft legislative resolution	Amendment
	1a. Recalls the Council declaration of 10 July 2009 on payment appropriations and invites the Commission to submit an amending budget if needed to cover the needs for additional payment appropriations for 2010;
Amendment  2 Draft legislative resolution Paragraph 1 b (new)
Draft legislative resolution	Amendment
	1b. Supports the proposed frontloading of payments but underlines that the overall financial programming should be respected; recalls that the final amounts for payments during the remaining programming period should be decided in the annual budgetary procedure;
Amendment  3 Draft legislative resolution Paragraph 1 c (new)
Draft legislative resolution	Amendment
	1c. Stresses that a possible derogation from the N+2 rule should remain exceptional and should apply only to the 2007 payment appropriations;
Amendment  4 Proposal for a regulation – amending act Recital 11
Text proposed by the Commission	Amendment
(11) As outlined in the Communication of the Commission of June 3 June 2009 on "A Shared Commitment for Employment", in order to counteract cash flow problems occurring in Member States as a result of financial constraints during the peak of the crisis and in order to speed up the implementation of active labour market measures aiming at supporting citizens and more specifically the unemployed or those at risk of unemployment, it is necessary to modify for a limited period of time the provisions concerning the calculation of interim payments. For this reason it is appropriate, without altering the national co-funding obligations which apply to operational programmes over the whole programming period, for the Commission to reimburse, where Member States so request, interim payment claims at 100% of the public contribution to each priority axis in operational programmes co-financed by the ESF.	deleted
Justification
The proposal to waive the co-financing obligation is not acceptable, not event temporarily, since it increases the risk of irregularities and is against a basic principle of structural policy.
Amendment  5 Proposal for a regulation – amending act Article 1 – point 10 Regulation (EC) No 1083/2006 Article 77
Text proposed by the Commission Amendment (10) Article 77 is replaced by the following: deleted "Article 77 Common rules for calculating interim payments and payments of final balance   1. Interim payments and payments of the final balance shall be calculated by applying the co-financing rate laid down in the decision on the operational programme concerned for each priority axis to the eligible expenditure mentioned under that priority axis in each statement of expenditure certified by the certifying authority.   However the Community contribution through the interim payments and payments of the final balance shall not be higher than the public contribution and the maximum amount of assistance from the Funds for each priority axis as laid down in the decision of the Commission approving the operational programme.   2. By way of derogation from the first subparagraph of paragraph 1, in the case of operational programmes co-financed by the ESF, interim payments by the Commission for statements of expenditure sent by the Member States by 31 December 2010 may, if a Member State so requests in order to facilitate implementation of anti-crisis measures, be made by paying 100% of the public contribution for each priority axis as mentioned under that priority axis in the statement of expenditure certified by the certifying authority. Where the Member State chooses this option, the Commission shall apply this system to all interim payments requests sent by 31 December 2010 for the given operational programme.   The difference between the total amount paid under the first sub-paragraph and the amount calculated under the first subparagraph of paragraph 1 shall not be taken into account to calculate interim payments for statements of expenditure sent after 31 December 2010. However, this difference shall be taken into account for the purpose of the provision under Article 79(1) and for the calculation of the payment of the final balance."
Justification
The proposal to waive the co-financing obligation is not acceptable, not event temporarily, since it increases the risk of irregularities and is against a basic principle of structural policy.
Amendment  6 Proposal for a regulation – amending act Article 1 – point 11 a (new) Regulation (EC) No 1083/2006 Article 82 – paragraph 1 – point e a (new)
Text proposed by the Commission Amendment   (11a) In Article 82(1), second subparagraph, the following point is added:   “(ea) for Member States that were granted loans in 2009 in accordance with Council Regulation (EC) No 332/2002 of 18 February 2002 establishing a facility providing medium-term assistance for Member States' balances of payments* or Member States with a GDP decrease in 2009 of more than 10 % in real terms in comparison to 2008: in 2010, 2 % of the contribution from the Cohesion Fund and 4 % of the contribution from the European Social Fund to the operational programme.   * OJ L 53, 23.2.2002, p. 1.”;
Justification
In the time of severe financial crisis, it is justifiable to continue with advance payments in the Cohesion fund and the Social Fund for countries which are in the most vulnerable economic situation.
Amendment  7 Proposal for a regulation – amending act Article 1 – point 11 b (new) Regulation (EC) No 1083/2006 Article 82 – paragraph 1 – subparagraph 2 a (new)
Text proposed by the Commission Amendment   (11b) In Article 82(1), the following subparagraph is added:   “For the purpose of applying the criteria referred to in point (f) of the second subparagraph, GDP figures shall be based on Community statistics published in November 2009 **.   ** European Economic Forecast Autumn 2009 (EUROPEAN ECONOMY. No. 10. 2009. Office for Official Publications of the EC. Luxembourg)."
Amendment  8 Proposal for a regulation – amending act Article 1 – point 12 a (new) Regulation (EC) No 1083/2006 Article 93 – paragraph 1
Text proposed by the Commission Amendment   (12a) Article 93 is amended as follows:   (a) paragraph 1 is replaced by the following:   "1. The Commission shall automatically de-commit any part of the amount calculated in accordance with the second subparagraph in an operational programme that has not been used for payment of the pre-financing or interim payments or for which an application for payment has not been sent in conformity with Article 86 by 31 December of the second year following the year of budget commitment under the programme, with the exception mentioned in paragraph 2. For the purpose of the automatic de-commitment, the Commission shall calculate the amount by adding one sixth of the annual budget commitment related to 2007 total annual contribution to each of 2008 to 2013 budget commitments."
Justification
Postponing the automatic de-commitment related to commitments made in 2007 gives some flexibility in a situation where the approval of operational programmes has been slow than expected.
Amendment  9 Proposal for a regulation – amending act Article 1 – point 12 b (new) Regulation (EC) No 1083/2006 Article 93 – paragraph 2 a (new)
Text proposed by the Commission Amendment   (b) the following paragraph is inserted after paragraph 2:   "2a. By way of derogation from paragraph 1, first subparagraph, and paragraph 2, the deadlines for automatic de-commitment shall not apply to the annual budget commitment related to 2007 total annual contribution."
Justification
Postponing the automatic de-commitment related to commitments made in 2007 gives some flexibility in a situation where the approval of operational programmes has been slow than expected.
Amendment  10 Proposal for a regulation – amending act Article 1 a (new)
Text proposed by the Commission	Amendment
	Article 1a Transitional measures
	In order to meet the exceptional circumstances of the transition to the de-commitment rules introduced by this Regulation, appropriations which have been cancelled because of de-commitments made by the Commission for the financial year 2007 in the implementation of the first subparagraph of Article 93(1) and Article 97 of Regulation (EC) No 1083/2006, pursuant to Article 11 of the Financial Regulation, shall be reconstituted to the extent necessary for the implementation of the second subparagraph of Article 93(1) of Regulation (EC) No 1083/2006.
Justification
Postponing the automatic de-commitment related to commitments made in 2007 gives some flexibility in a situation where the approval of operational programmes has been slow than expected.

ANNEX 1

ANNEX 2

2007-2013
Cohesion Fund						European Social Fund
	EU financing, billion EUR	National co financing, billion EUR	Total funds, billion EUR	2% of EU financing, billion EUR	EU financing, billion EUR	National co financing, billion EUR	Total funds, billion EUR	4% of EU financing, billion EUR
Countries
Estonia	1,1	0,2	1,3	0,022	0,4	0,05	0,5	0,016
Hungary	8,6	1,5	10,1	0,172	3,7	0,6	4,3	0,148
Latvia	1,5	0,5	2	0,03	0,6	0,12	0,7	0,024
Lithuania	2,3	0,5	2,8	0,046	1	0,2	1,2	0,04
Romania	6,5	1,3	7,8	0,13	3,7	0,7	4,4	0,148
Total	20	4	24	0,4	9,4	1,67	11,1	0,376

PROCEDURE

Title	General provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund as regards simplification of certain requirements and as regards certain provisions relating to financial management
References	COM(2009)0384 – C7-0003/2010 – 2009/0107(COD)
Committee responsible	REGI
Opinion by        Date announced in plenary	BUDG 18.1.2010
Rapporteur        Date appointed	Ivars Godmanis 21.10.2009
Date adopted	17.3.2010
Result of final vote	+: –: 0:	27 3 2
Members present for the final vote	Damien Abad, Alexander Alvaro, Francesca Balzani, Reimer Böge, Andrea Cozzolino, Jean-Luc Dehaene, Göran Färm, José Manuel Fernandes, Eider Gardiazábal Rubial, Salvador Garriga Polledo, Jens Geier, Ivars Godmanis, Ingeborg Gräßle, Carl Haglund, Jutta Haug, Anne E. Jensen, Ivailo Kalfin, Alain Lamassoure, Vladimír Maňka, Barbara Matera, Nadezhda Neynsky, Miguel Portas, Vladimír Remek, Dominique Riquet, László Surján, Daniël van der Stoep, Derek Vaughan, Angelika Werthmann, Jacek Włosowicz
Substitute(s) present for the final vote	Paul Rübig, Georgios Stavrakakis
Substitute(s) under Rule 187(2) present for the final vote	Jan Kozłowski

OPINION of the Committee on Employment and Social Affairs (17.3.2010)

for the Committee on Regional Development

on the proposal for a Council regulation amending Regulation (EC) No 1083/2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund as regards simplification of certain requirements and as regards certain provisions relating to financial management
(COM(2009)0384 – C7‑0003/2010 – 2009/0107(COD))

Rapporteur: Bastos

SHORT JUSTIFICATION

In the context of the current economic and financial crisis, the Council of the European Union of 11 and 12 December 2008 agreed on a European Economic Recovery Plan (EERP), which envisages the initiation of priority action to enable European economies to adjust more rapidly to current challenges.

In its recovery package, the Commission had already proposed a number of regulatory changes in September 2008 and November 2008 in order to simplify the implementation rules for cohesion policy and to increase the pre-financing (advance payments) to ERDF and ESF programmes.

On 3 June 2009, the Commission presented a communication on 'A Shared Commitment for Employment' in which additional measures were proposed in order to boost job creation and counter the effects of the crisis on jobs.

The Commission considers that more effort is needed to facilitate the management of the Community funding in order to speed up the flow of the funding to the beneficiaries that are most affected by the economic downturn.

The current proposal, adopted on 22 July 2009, therefore includes additional elements of simplification, with the overall objective of streamlining co-financed investments in Member States and regions and of increasing the impact of the funding on the whole economy, and in particular on small and medium-sized enterprises and on employment. Small and medium-sized enterprises are the motor of the European economy and the main producers of sustainable growth, creating numerous quality jobs. In the EU, some 23 million SMEs constitute 99% of EU businesses and account for some 75 million jobs. In some key sectors, such as textiles, construction and furniture production, SMEs account for up to 80% of all jobs.

Further simplification and clarification of rules governing cohesion policy will undeniably have a positive impact on the pace of programme implementation, particularly by providing national, regional and local authorities with clearer and less bureaucratic rules that will allow more flexibility in order to adapt the programmes to the new challenges.

This proposal will require amendments to Council Regulation No 1083/2006 on the general provisions governing Cohesion policy.

AMENDMENTS

The Committee on Employment and Social Affairs calls on the Committee on Regional Development, as the committee responsible, to incorporate the following amendments in its report:

Amendment  1 Proposal for a regulation – amending act Recital 1 a (new)
Text proposed by the Commission	Amendment
	(1a) Underlines the importance of the greater use of the synergies and complementarities between the various financial instruments available, including the European Regional Development Fund, the Cohesion Fund, the European Social Fund, the European Integration Fund, the programme of Community action on public health and the European Agricultural Fund for Rural Development, in order to meet the complex targets of the EU 2020 Strategy, which aims to deliver smarter, socially inclusive and greener growth and to support more effectively the least favoured micro-regions and the most vulnerable groups facing complex multi-dimensional disadvantages.
Amendment  2 Proposal for a regulation – amending act Recital 2
Text proposed by the Commission	Amendment
(2) In order to facilitate the management of Community funding, to help accelerate the investment in the Member States and regions and to increase the impact of the funding on the economy, it is necessary to further simplify the rules governing cohesion policy.	(2) In order to facilitate the management of Union funding, to help accelerate the investment at all levels of government – from national to local – and to boost the impact of the funding on the economy and the creation of sustainable jobs ensuring participation in society, and its actors, in particular SMEs, thereby boosting employment, it is also necessary to further simplify the rules governing the European Regional Development Fund, the European Social Fund and the Cohesion Fund, at Union and national level.
Amendment  3 Proposal for a regulation – amending act Recital 6
Text proposed by the Commission	Amendment
(6) In order to facilitate the adaptation of operational programmes to respond to the current financial and economic crisis, the Member States should provide an analysis justifying the revision of an operational programme instead of an evaluation.	(6) In order to facilitate the adaptation of operational programmes to respond to the current financial and economic crisis and its effects on businesses and employment, the Member States should provide an analysis justifying the revision of an operational programme instead of an evaluation.
Amendment  4 Proposal for a regulation – amending act Recital 11
Text proposed by the Commission	Amendment
(11) As outlined in the Communication of the Commission of June 3 June 2009 on "A Shared Commitment for Employment", in order to counteract cash flow problems occurring in Member States as a result of financial constraints during the peak of the crisis and in order to speed up the implementation of active labour market measures aiming at supporting citizens and more specifically the unemployed or those at risk of unemployment, it is necessary to modify for a limited period of time the provisions concerning the calculation of interim payments. For this reason it is appropriate, without altering the national co-funding obligations which apply to operational programmes over the whole programming period, for the Commission to reimburse, where Member States so request, interim payment claims at 100% of the public contribution to each priority axis in operational programmes co-financed by the ESF.	deleted
Amendment  5 Proposal for a regulation – amending act Recital 11 a (new)
Text proposed by the Commission	Amendment
	(11a) It is necessary to implement operational programmes accurately and to use Union funding optimally in order to respond to the need to implement active labour market measures, such as training the unemployed, anticipating and managing restructuring measures, upgrading skills of employees to the needs of the labour market in accordance with the economy as well as providing high-quality apprenticeships for young people. The need to keep people in employment or allow them to find a job is more urgent in an economic and financial crisis.
Amendment  6 Proposal for a regulation – amending act Recital 11 b (new)
Text proposed by the Commission	Amendment
	(11b) In times of crisis, in particular, with a higher pressure on the job market and a greater risk of redundancies, it is necessary to be able to respond with a flexible approach in order to provide targeted support for Member States and individual regions particularly affected. It is important, therefore, to establish rules that will enable the European Social Fund to respond quickly in future, to prevent delays in the implementation of programmes and negative effects on the preservation and creation of sustainable jobs ensuring participation in society.
Amendment  7 Proposal for a regulation – amending act Recital 12 a (new)
Text proposed by the Commission	Amendment
	(12a) In view of the exceptional circumstances and the severe and unprecedented impact of the present economic and financial crisis on Member State budgets, an additional pre-financing instalment for 2010 is required for those Member States or individual regions worst affected by the crisis, so that a regular flow of funds can be assured and payments can be made to beneficiaries as programmes are implemented.
Amendment  8 Proposal for a regulation – amending act Recital 14 a (new)
Text proposed by the Commission	Amendment
	(14a) The deadline for calculating the automatic decommitment of the annual budget commitment related to the 2007 total annual contribution should be extended to allow better absorption of funding for individual operational programmes. Such flexibility is necessary because the programmes have been slower to start up than expected and were subject to late approval. In view of the crisis, such a measure will ensure adequate support for job creation and preservation initiatives.
Amendment  9 Proposal for a regulation – amending act Article 1 – point 4 a (new) Regulation (EC) No 1083/2006 Article 47 – paragraph 1
Text proposed by the Commission Amendment   (4a) Article 47(1) is replaced by the following:   ‘1. Evaluations shall aim to improve the quality, effectiveness and consistency of the assistance from the Funds and the strategy and implementation of operational programmes with respect to the specific structural problems affecting the Member States and regions concerned, while taking account of the objective of sustainable development and of the relevant Union legislation concerning environmental impact, including the process of barrier-free environment for the disabled, and strategic environmental assessment.’
Justification
This modification serves the obligations laid down in Article 16 of the regulation. Article 16 stresses the importance of accessibility for people with disabilities where the regulation indicates that ‘accessibility for disabled persons shall be one of the criteria to be observed in defining operations co-financed by the Funds and to be taken into account during the various stages of implementation’.
This modification also helps implementing the articles 2 (2) and 3 (b) of REGULATION (EC) No 1081/2006 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 5 July 2006 on the European Social Fund and repealing Regulation (EC) No 1784/1999 in order to make Europe a more accessible place for a growing number of ageing and disabled people. This proposal also helps the Member States to prepare themselves for planning, coordinating and eventually implementing their efforts for realizing same standard measures for people with disabilities in the long run with equal basis, with special regards to the UN Convention on the rights of persons with disabilities which already had been adopted by the European Council last November. The needs of people with disabilities are the same wherever live in the European Union and the modification finally serves their ability of mobility as well.
Amendment  10 Proposal for a regulation – amending act Article 1 – point 5 a (new) Regulation (EC) No 1083/2006 Article 55 – paragraph 2 – subparagraph 3
Text proposed by the Commission Amendment   (5a) In Article 55(2), subparagraph 3 is replaced by the following:   ‘In the calculation, the managing authority shall take account of the reference period appropriate to the category of investment concerned, the category of project, the profitability normally expected of the category of investment concerned, the application of the polluter-pays principle, and, where appropriate, considerations of equity linked to the relative prosperity of the Member State concerned.’
Amendment  11 Proposal for a regulation – amending act Article 1 – point 6 Regulation (EC) No 1083/2006 Article 55 – paragraph 3
Text proposed by the Commission Amendment 3. Where it is objectively not possible to estimate the revenue in advance, the net revenue generated within five years of the completion of an operation shall be deducted from the expenditure declared to the Commission. 3. Where it is objectively not possible or technically reliable to estimate the revenue in advance, the net revenue generated within five years of the completion of an operation shall be deducted from the expenditure declared to the Commission.
Amendment  12 Proposal for a regulation – amending act Article 1 – point 10 Regulation 1083/2006/EC Article 77
Text proposed by the Commission Amendment (10) Article 77 is replaced by the following: deleted "Article 77   Common rules for calculating interim payments and payments of the final balance   1. Interim payments and payments of the final balance shall be calculated by applying the co-financing rate laid down in the decision on the operational programme concerned for each priority axis to the eligible expenditure mentioned under that priority axis in each statement of expenditure certified by the certifying authority.   However the Community contribution through the interim payments and payments of the final balance shall not be higher than the public contribution and the maximum amount of assistance from the Funds for each priority axis as laid down in the decision of the Commission approving the operational programme.   2. By way of derogation from the first subparagraph of paragraph 1, in the case of operational programmes co-financed by the ESF, interim payments by the Commission for statements of expenditure sent by the Member States by 31 December 2010 may, if a Member State so requests in order to facilitate implementation of anti-crisis measures, be made by paying 100% of the public contribution for each priority axis as mentioned under that priority axis in the statement of expenditure certified by the certifying authority. Where the Member State chooses this option, the Commission shall apply this system to all interim payments requests sent by 31 December 2010 for the given operational programme.   The difference between the total amount paid under the first sub-paragraph and the amount calculated under the first subparagraph of paragraph 1 shall not be taken into account to calculate interim payments for statements of expenditure sent after 31 December 2010. However, this difference shall be taken into account for the purpose of the provision under Article 79(1) and for the calculation of the payment of the final balance."
Amendment  13 Proposal for a regulation – amending act Article 1 – point 11 a (new) Regulation (EC) No 1083/2006 Article 82 – paragraph 1 – point e a (new)
Text proposed by the Commission Amendment   (11a) In Article 82(1) the following point is added:   ‘(ea) for Member States that were granted assistance in 2009 in accordance with Council Regulation (EC) No 332/2002 of 18 February 2002 establishing a facility providing medium-term financial assistance for Member States’ balances of payments1 or Member States with a GDP decrease in 2009 of more than 10% in real terms in comparison with the previous year or in which the rate of unemployment, either nationally or in particular regions, has increased by more than three percentage points in comparison with the previous year, in 2010 2% of the contribution from the Cohesion Fund and 4% of the contribution from the European Social Fund to the operational programme.   1 OJ L 53, 23.2.2002, p. 1.’
Amendment  14 Proposal for a regulation – amending act Article 1 – point 12 a (new) Regulation (EC) No 1083/2006 Article 93 – paragraph 1
Text proposed by the Commission Amendment   (12a) Article 93(1) is replaced by the following:   ‘1. The Commission shall automatically decommit any part of the amount calculated in accordance with the second subparagraph in an operational programme that has not been used for payment of the pre-financing or interim payments or for which an application for payment has not been sent in conformity with Article 86 by 31 December of the second year following the year of budget commitment under the programme, with the exception mentioned in paragraph 2.   For the purpose of automatic decommitment referred to in the first subparagraph, the Commission shall calculate the amount by adding one sixth of the annual budget commitment related to 2007 total annual contribution to each of 2008 to 2013 budget commitments.’
Justification
Postponing the automatic de-commitment related to commitments made in 2007 gives some flexibility in a situation where the approval of operational programmes has been slow than expected.
Amendment  15 Proposal for a regulation – amending act Article 1 – point 12 b (new) Regulation (EC) No 1083/2006 Article 93 – paragraph 2 a (new)
Text proposed by the Commission Amendment   (12b) In Article 93, the following paragraph is inserted:   ‘2a. By way of derogation from the first subparagraph of paragraph 1 and from paragraph 2, the deadlines for automatic decommitment shall not apply to the annual budget commitment related to the 2007 total annual contribution.’
Justification
Postponing the automatic de-commitment related to commitments made in 2007 gives some flexibility in a situation where the approval of operational programmes has been slow than expected.
Amendment  16 Proposal for a regulation – amending act Article 1 a (new)
Text proposed by the Commission	Amendment
	Article 1a
	Transitional measures
	In order to meet the exceptional circumstances of the transition to the decommitment rules introduced by this Regulation, appropriations which have been cancelled because of decommitments made by the Commission for the financial year 2007 in the implementation of the first subparagraph of Article 93(1) and of Article 97 of Regulation (EC) No 1083/2006, pursuant to Article 11 of the Financial Regulation, shall be reconstituted to the extent necessary for the implementation of the second subparagraph of Article 93(1) of Regulation (EC) No 1083/2006.
Justification
Postponing the automatic de-commitment related to commitments made in 2007 gives some flexibility in a situation where the approval of operational programmes has been slow than expected.
Amendment  17 Proposal for a regulation – amending act Article 1 b (new)
Text proposed by the Commission	Amendment
	Article 1b
	The Commission shall report to the European Parliament and the Council about the effect of this Regulation on the level of payments and to what extent it will take into account the level of payments in its draft budget. The Commission report should also assess the effects of this Regulation on employment and social inclusion.

PROCEDURE

Title	General provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund as regards simplification of certain requirements and as regards certain provisions relating to financial management
References	COM(2009)0384 – C7-0003/2010 – 2009/0107(COD)
Committee responsible	REGI
Opinion by        Date announced in plenary	EMPL 18.1.2010
Rapporteur        Date appointed	Regina Bastos 17.9.2009
Discussed in committee	4.3.2010		16.3.2010
Date adopted	17.3.2010
Result of final vote	+: –: 0:	32 2 1
Members present for the final vote	Regina Bastos, Edit Bauer, Pervenche Berès, Milan Cabrnoch, David Casa, Alejandro Cercas, Ole Christensen, Derek Roland Clark, Sergio Gaetano Cofferati, Marije Cornelissen, Karima Delli, Proinsias De Rossa, Frank Engel, Sari Essayah, Ilda Figueiredo, Thomas Händel, Marian Harkin, Roger Helmer, Nadja Hirsch, Stephen Hughes, Danuta Jazłowiecka, Patrick Le Hyaric, Veronica Lope Fontagné, Olle Ludvigsson, Elizabeth Lynne, Thomas Mann, Elisabeth Morin-Chartier, Rovana Plumb, Joanna Katarzyna Skrzydlewska, Jutta Steinruck, Traian Ungureanu
Substitute(s) present for the final vote	Jürgen Creutzmann, Dieter-Lebrecht Koch, Csaba Sógor, Emilie Turunen

PROCEDURE

Title	General provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund as regards simplification of certain requirements and as regards certain provisions relating to financial management
References	COM(2009)0384 – C7-0003/2010 – 2009/0107(COD)
Date submitted to Parliament	22.7.2009
Committee responsible        Date announced in plenary	REGI 18.1.2010
Committee(s) asked for opinion(s)        Date announced in plenary	BUDG 18.1.2010		CONT 18.1.2010		EMPL 18.1.2010
Not delivering opinions        Date of decision	CONT 1.10.2009
Rapporteur(s)        Date appointed	Evgeni Kirilov 5.10.2009
Discussed in committee	6.10.2009		4.11.2009		2.12.2009		22.2.2010
Date adopted	18.3.2010
Result of final vote	+: –: 0:	36 4 1
Members present for the final vote	François Alfonsi, Luís Paulo Alves, Charalampos Angourakis, Sophie Auconie, Catherine Bearder, Victor Boştinaru, Philip Bradbourn, Zuzana Brzobohatá, John Bufton, Alain Cadec, Salvatore Caronna, Ricardo Cortés Lastra, Tamás Deutsch, Rosa Estaràs Ferragut, Danuta Maria Hübner, Ian Hudghton, Evgeni Kirilov, Constanze Angela Krehl, Ramona Nicole Mănescu, Riikka Manner, Iosif Matula, Lambert van Nistelrooij, Franz Obermayr, Jan Olbrycht, Wojciech Michał Olejniczak, Markus Pieper, Tomasz Piotr Poręba, Monika Smolková, Nuno Teixeira, Michael Theurer, Oldřich Vlasák, Kerstin Westphal, Joachim Zeller
Substitute(s) present for the final vote	Karima Delli, Ivars Godmanis, Karin Kadenbach, Maurice Ponga, Marie-Thérèse Sanchez-Schmid, László Surján, Sabine Verheyen, Iuliu Winkler