Verbatim report of proceedings

Monday, 15 December 2008 - Strasbourg

19. ERDF, ESF, Cohesion Fund (revenue-generating projects) (debate)

  President. − The next item is the report (A6-0477/2008) by Mr Arnaoutakis, on behalf of the Committee on Regional Development, on the proposal for a Council Regulation (EC) amending Regulation (EC) 1083/2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund in respect of certain revenue-generating projects (13874/2008 – C6-0387/2008 – 2008/0186(AVC)).

  Stavros Arnaoutakis, rapporteur. − (EL) Mr President, Commissioner, ladies and gentlemen, the new financial management rules in the general Regulation (EC) No 1083/2006 include provisions for financing contributions from the funds and, in particular, on revenue-generating projects (Article 55), projects which, as there is a clear danger of their being over-financed, need special treatment in order to take account of revenue when calculating the maximum percentage of Community financing. A method therefore needs to be defined for calculating the revenue from such projects. During the previous period from 2000 to 2006, this principle was applied in practice using a flat-rate method. During the new programming period, according to the Commission's proposal, which the Council has accepted, a more precise and stringent approach is applied when calculating Community financing of revenue-generating projects. This new approach is based on the calculation of maximum eligible expenditure, rather than a flat-rate reduction in the percentage of cofinancing. Under Article 55, for the 2007-2013 period, a revenue-generating project means any operation involving an investment in infrastructure the use of which is subject to charges borne directly by users or any operation involving the sale or rent of land or buildings or any other provision of services against payment. An important difference therefore, in the new period is that, according to the definition in paragraph [...], the provisions of Article 55 apply to a broad spectrum of projects which qualify as revenue-generating projects and not just to projects to invest in infrastructure which generates large net revenue, as was the case in the 2000-2006 period.

According to the outcome of the informal consultation of Member States by the European Commission, the provisions of Article 55 are clearly unsuitable for projects cofinanced by the European Social Fund, which mainly finances intangible operations rather than infrastructure projects. The same applies to minor projects implemented with cofinancing from the European Regional Development Fund and the Cohesion Fund. For these projects, the monitoring rules which must be adhered to, such as the fact that revenue may be taken into account for three years after closure of the operational programme, are a disproportionate administrative burden in relation to the anticipated amounts and pose a serious risk during programme implementation. That is why, after it had consulted the Member States, the Commission felt it necessary to seek approval of an amendment to Regulation (EC) No 1083/2006, which is limited to Article 55(5) and relates to the following two points only: the exemption from the provisions of Article 55 of operations cofinanced by the European Social Fund and the definition of a threshold, set at EUR 1 million, below which projects financed by the ERDF or the Cohesion Fund would be exempt from the provisions of Article 55 as regards calculation of the maximum eligible expenditure and as regards monitoring. The remaining provisions of Article 55 have not been amended.

Furthermore, given that it is important to safeguard the imposition of common project implementation rules throughout the programming period, a retroactive validity clause has been included, so that the revised provision applies from 1 August 2006. This technical amendment will simplify the management of revenue-generating projects where possible, by limiting the administrative burden in accordance with the principle of proportionality.

  Vladimír Špidla, Member of the Commission. – (CS) Mr President, ladies and gentlemen, on 15 November the Commission adopted the draft revision of Article 55 of the general regulation on Structural Funds, which applies to the conditions for taking account of revenue-generating projects within the framework of the cohesion policy programme. The reason for the change was to simplify administrative procedures. The first actual operation carried out in accordance with Article 55 showed that there were serious difficulties with effective implementation. These difficulties, as reported by the Member States, demonstrated that there was a lack of proportionality in the application of the procedures for setting the maximum eligible amount of the so-called ‘funding gap’ and in monitoring projects.

The aim of the amendment to the regulation in question is to exempt all operations cofinanced from the European Social Fund as well as small projects with overall costs of less than EUR 1 million cofinanced from the European Fund for Regional Development and the Cohesion Fund through the application of Article 55. The decision to impose a ceiling of EUR 1 million arose from preliminary studies and was aimed at retaining the general nature of Article 55.

We hope that thanks to this simplification, which constitutes a form of ‘de minimis’ clause, we will be able to speed up the administration of funds for the Member States and their regions, especially in relation to the most innovative operations in areas such as research and support for renewable energy sources, etc.

It was nevertheless important to avoid legal uncertainty, which would have unfairly delayed the payment process. The uncertainty could have led project managers to interrupt the running of operational programmes, which had to be avoided at all costs.

In view of this, the Commission decided to propose only one change of a technical nature. This decision led to success since we completed the revision process in just three months, thanks to the work of the Council and the parliamentary committees for regional development and employment. On behalf of the Commission I would like to express my sincere gratitude to your rapporteur Mr Arnaoutakis. Thanks to our productive cooperation I hope to secure agreement from the European Parliament, thus making it possible to complete the revision by the end of the year. This would allow the managing authorities to continue with their work, which is a compelling aspect of the simplification.

The revision of Article 55 has also demonstrated the quality of the work being undertaken in collaboration with the Directorate General for Regional Policy and the Directorate General for Employment which benefits political cohesion. This cooperation has never weakened. The proof of this is that within the framework of the plan to assist European economic regeneration we have combined forces with Commissioner Hübner on a proposal for three new fundamental amendments to structural fund regulations. These amendments will also be debated.

  Jan Olbrycht, on behalf of the PPE-DE Group. – (PL) Mr President, we have before us what is essentially a very short and succinct regulation. It is, however, of great significance. Its significance relates to the context of the change.

Firstly, through this change, the European institutions are demonstrating that they are able to respond flexibly to the difficulties arising during implementation of a certain policy. A readiness to genuinely simplify and facilitate procedures for the beneficiaries indicates that the European Commission, in conjunction with the European Parliament and the Council, is truly prepared to adjust provisions to prevailing conditions.

Secondly, this Regulation is also significant insofar as it involves amending a regulation during the programming period. This is particularly important, because it is not the final change, and the conduct of debates on change to that regulation will be very significant in the context of preparing an amending package linked to the crisis.

Thirdly, the European Commission has repeatedly been criticised for the way it monitors allocation of resources. The Court of Auditors’ criticism mainly concerned overly complicated procedures.

Today’s Regulation indicates that bold and decisive action is called for, so as to improve effectiveness and demonstrate that it is possible for European funds to be allocated in a swift, efficient and effective manner.

  Jean Marie Beaupuy, on behalf of the ALDE Group. – (FR) Mr President, Commissioner, as my fellow Member, Mr Olbrycht, just said, this is a simplification first – we hope so, at least. It is without doubt the run-up to Christmas that is inspiring us to make this progress, to offer this gift to Europeans.

However, as Mr Olbrycht just said, we hope, above all, that this gift is not the only one of its kind and, next March, we will have to give our verdict on the recovery plan so that, in the face of the financial crisis, we have more productive initiatives with which to look forward to a Europe-wide recovery.

Within these drafts that we shall have to vote on in March, we are convinced that the Commission will propose new simplification tools to us, particularly regarding our ‘small-scale players’, regarding our SMEs. This is absolutely vital since, if the policies that we are debating and that we have been working on for months and years are to be genuinely effective, then this will, this dynamic that we want, must not be thwarted by any discouraging administrative aspects.

Commissioner, you emphasised just now this good work that has been done with Parliament’s Committee on Regional Development, in particular. You know that we, the other Members of this House, are very keen to work with the Commission. That is why I would stress, once again, that we are hopeful of making very firm progress towards new simplifications during the coming year.

However, the work that we are doing aside, it is our wish, at European level, that – through you, at the Commission, in particular – the Member States assume their share of the responsibility. We all know that, at the level of the ERDF and ESF Funds, and of the CAP Fund and so on, it is the Member States that add further complexities to our own European administrative complexities.

Through our action and through our debate this evening, we hope not only that the European Union’s initiative will be acted upon at EU level, but also that, at Member State level, we are heard and that they too make a clear effort to simplify.

  Mieczysław Edmund Janowski, on behalf of the UEN Group. – (PL) Mr President, essentially, the European Parliament resolution we are today debating is of a formal and technical nature. Nonetheless, it relates to important issues concerning use of Union aid. The proposed Regulation concerns Article 55 of the Council Regulation laying down general provisions for the European Regional Development Fund, the European Social Fund and the Cohesion Fund. The current wording of paragraph 5, referring to a sum of EUR 200 thousand as the maximum monitoring procedure cost, is replaced with a text whereby the provisions concerning revenue-generating projects will only be applied to operations funded by the European Regional Development Fund or the Cohesion Fund if their cost does not exceed EUR 1 million.

With this in mind, I should like to pose the following question. Is the sum referred to adequate? Is it not too high or too low? I am convinced that this can be a way of avoiding unnecessary bureaucratic burden in relation to a large group of smaller operations. It should lead to more operational management of projects that often involve local authorities and concern environmental protection, innovation and energy for instance. By way of example I could mention that in Poland we have over one hundred different types of institutions managing the implementation of Union funds. Effective use of this aid depends on the efficient operation of such institutions.

I also trust that adoption of this initiative will lead to further simplification in the future, as the Commissioner was kind enough to indicate. On behalf of the Union for Europe of the Nations Group, I would like to express appreciation of this creative approach to provisions, enabling Union resources to be used in the most rational manner possible.

  Lambert van Nistelrooij (PPE-DE). – (NL) Mr President, Commissioner, Mr Arnaoutakis’s proposal clearly illustrates that simplification is possible, and this is something Parliament has enquired about on many occasions. It is also taking a very long time, in a number of cases, for projects to be finalised in the Member States and, for the Group of the European People's Party (Christian Democrats) and European Democrats, this is a good example of efficient simplification.

This time round, the desire for change came from the Member States and from the Commission, but more can be done. I happen to know that a working party of regions and cities has been set up in the Committee of the Regions, whose mission is to identify and tackle these bottlenecks, and which aims to make proposals to this effect. I think that we should, in fact, utilise these very experiences and pick up on further changes in 2009.

Moreover, the Commission has presented the entire package, including the economic recovery plan, in which context funds can be spent more quickly, amongst other things. In Parliament this week, we will be discussing the Haug report in the framework of the budget, in which the wish is expressed to carry on working in this vein and to pick up speed as other control and management-related aspects are examined.

Finally, I should like to touch upon a topic that was also broached by Mr Beaupuy: Member States can do an awful lot by, for example, making the financial management declaration, or taking political responsibility for the implementation of funds. As a result, we, in our resolutions, could simplify procedures even further. The urge for change from the people on the ground is considerable. Certainly with a view to next year’s elections, we should be able to say that Europe does do good things, but it should also do them properly. The Member States’ declarations are a step in that direction.

  Gábor Harangozó (PSE). – (HU) The purpose of the regulations governing the use of EU grants is to ensure that these sources will be utilised in the best possible manner and be allocated to the most appropriate place. In other words, the funds must not only be spent, but spent for genuine, revenue-generating investments. However, we often set up such a bureaucratic system of regulations for this purpose that it is more of a hindrance to efficient use, and represents an unnecessary burden for both the enterprises and the administration.

The streamlining of revenue-generating regulations has a twofold benefit. A greater number of small and medium-sized enterprises can have more ready access to EU funds for economic stimulus, while the administration is able more quickly and simply to determine whether these funds are being used properly. We must trust our entrepreneurs, those who make the economy work; we can pull through this crisis only if we join together and help each other. I support the proposal, and at the same time I ask the Commission to continue on the same path, weeding out unnecessary administrative obstacles from the assistance programme. I sincerely hope that this inaugural programme will be followed by other similarly sound initiatives.

  Zbigniew Krzysztof Kuźmiuk (UEN). – (PL) Mr President, I should like to draw attention to four issues in the debate on changes to Council regulations concerning structural funds.

Firstly, the legal provisions applicable to benefiting from European Regional Development Fund, Cohesion Fund and European Social Fund financial aid are often so complicated that they deter potential beneficiaries from applying for these resources. The aforementioned legal provisions can also hinder project implementation and accounting.

Secondly, it is therefore entirely appropriate for the European Commission to have tabled a proposal to amend Article 55 of the Regulation. One of the effects of the amendment would be to exclude revenue-generating projects funded by the Cohesion Fund from the scope of Article 55. This change should facilitate the implementation of actions such as projects aimed at social inclusion or the provision of care services, for instance.

Thirdly, the scope of application of Article 5 of the Regulation would also be limited as regards small projects cofinanced by the European Regional Development Fund and the Cohesion Fund in terms of calculating the maximum sum of eligible expenditure and the monitoring of these projects. In addition, all these measures would apply retroactively from 1 August 2006.

Fourthly, all these proposals are a positive example of how provisions regarding the structural funds can be simplified effectively, thus enabling them to be used more efficiently. In my view, not only does this serve the interests of the beneficiaries, but it also benefits all European Union citizens.

  Jan Březina (PPE-DE). – (CS) The bill under discussion deals with the problem of revenue-generating projects. This problem directly affects many claimants drawing funds from the European Regional Development Fund and the European Social Fund. The current legal arrangements have imposed a significant administrative burden and have also created a situation of legal uncertainty as for a whole three years after the conclusion of an operational programme they allow revenues from the project to be taken into account. If revenues exceed a specified minimum level, there is a risk that the claimant and ultimately the state also will have to return the funds.

I firmly believe that such a rigid approach has no place, especially for small projects and projects financed from the European Social Fund. Concerning the second category of projects in particular, there are no revenues of a commercial nature, only revenues of local authorities and non-profit making organisations that are raised in the form of administrative and other fees. As these revenues subsequently serve to implement objectives that are in the public interest, it makes no sense to return them to the EU.

In my opinion our task is to simplify the mechanism for drawing money from the structural funds while of course retaining the controls that are essential for supervising the transparent handling of EU finances. I therefore welcome the decision to exempt projects financed by the European Social Fund from the mechanism for monitoring revenues and the decision to raise the cost limit from EUR 200 thousand to EUR 1 million in the case of projects financed from the European Regional Development Fund and the Cohesion Fund. This step will undoubtedly simplify administration and increase efficiency in the implementation of these projects.

  Silvia-Adriana Ţicău (PSE). – (RO) The European Regional Development Fund, European Social Fund and Cohesion Fund are instruments which have been provided to Member States to support the economic development of various European regions. However, the perception is that using these financial instruments involves a great deal of red tape.

For the 2007–2013 period an approach based on calculating maximum eligible expenditure is being used instead of a forced reduction in the cofinancing rate. The purpose of the proposal amending the regulation is to replace the arrangement based on proportionality for monitoring operations under EUR 200 000 by not applying the provisions of Article 55, operations cofinanced by the European Social Fund and operations cofinanced by the European Regional Development Fund or Cohesion Fund, the total cost of which is less than EUR 1 000 000. The retroactive application of this amendment simplifies the management of cofinanced operations from the structural funds, in terms of both calculating maximum eligible expenditure and monitoring.

Reducing the disproportionate administrative burden will be beneficial in particular to SMEs managing projects in the areas of the environment, social inclusion, research, innovation or energy. Thank you.

  Andrzej Jan Szejna (PSE). – (PL) Mr President, for small projects cofinanced by the European Regional Development Fund and the Cohesion Fund, and also for operations cofinanced by the European Social Fund, the current monitoring mechanisms undoubtedly represent an undue administrative burden that is disproportionate to the sums concerned and a significant risk factor for the implementation of these programmes. Pursuant to the monitoring mechanisms, income may be taken into account for as long as three years after closure of the programme.

The Commission has therefore recognised, quite rightly, that it is necessary and important to adopt changes to Article 55(5) of Regulation 1083/2006. The purpose of these changes is to effectively simplify the existing provisions concerning structural funds in the interests of the citizens and for their benefit. The changes would apply in important areas such as the natural environment, social inclusion, research, competitiveness and energy.

I should like to say that, in the context of the current financial and economic crisis, great efforts are also being made in Poland to ensure that structural funds can be used at the earliest opportunity. The aim is to enable funds to be allocated as soon as possible. For the new Member States in particular, this is one potential way of countering the economic crisis. The structural funds must be used swiftly and efficiently.

  Zuzana Roithová (PPE-DE). – (CS) I and many small-scale entrepreneurs would like to express our appreciation for the way in which the European Commission has reacted with unexpected speed, vigour and directness to suggestions from both Member States and MEPs in submitting this additional clause for Regulation 1083. The simplification of the law, together with retrospective application, is above all good news for the great majority of small firms with projects worth up to EUR 1 million which may contribute significant added value in terms of European competitiveness and especially employment. I view the flexible approach taken by the European Commission as a harbinger of further good news concerning the de-bureaucratisation of the complex processes for monitoring small projects.

  Vladimír Špidla, Member of the Commission. – (CS) I would like to thank you for the debate. I think that the arguments in favour of the proposal have come from many sides. I have nothing to add to them. A question was put, however, about the method of determining the figure of one million. Allow me, therefore, to touch on this very briefly. In the first place we had the experience of the previous periods and secondly there was the relatively challenging effort to simplify the system without disrupting its overall equilibrium. Therefore the idea of a specific limit was proposed and at the same time the Commission carried out a study into these questions. Based on these ideas and also on the recommendations of 3 July 2008 from the working group on structural activities, the Commission specified in the proposal an amount which, as I have heard in the debate, is generally regarded as acceptable.

  Stavros Arnaoutakis, rapporteur. − (EL) Mr President, ladies and gentlemen, simplifying procedures and ensuring mechanisms are flexible is extremely important during this serious financial crisis. Cohesion policy has an important role to play. The amendment to Article 55 is a good example of excellent cooperation between the institutions of the European Union. That is why I should like specifically to thank Commissioner Hübner and the President of the European Parliament for adopting the proposal so that it can be voted through by the end of the year. As one Member said, this decision is a Christmas present.

Simplification will work positively for European citizens and this evening we are sending out a message that we can amend some regulations for the benefit of European citizens. This method of direct amendment must be used again in future, as it has been proven that bureaucratic procedures make it hard to implement projects. I am certain that the new provisions will help to improve the application of the priorities of cohesion policy.

  President. − The debate is closed.

The vote will take place on Tuesday 16 December 2008.