Cohesion Policy constitutes a rich area for political and academic debates. In December 2020, the new Cohesion Policy legislative package (2021-2027) was ratified between the European Parliament and the Council on Cohesion Policy. This new Cohesion Policy is considered more simplified and flexible compared to the 2014-2020 programming period. However, the implications of those novelties in post-2020 Cohesion Policy remain undetermined. This blog aims to contribute to the discussion around Cohesion Policy by focusing on new simplifications. As result, this contribution will shed light on ‘the new simplified Cohesion Policy’ through two simplification mechanisms: the Common Provision Regulation (CPR) and Simplified Cost Options (SCOs).
Shorter and unified new Cohesion Policy legal framework
The CPR means the Regulation, thus, a legal framework, that sets out the common rules (i.e. provisions) for the five European Structural and Investment Funds (ESI) funds: the Cohesion Fund (CF), the European Regional Development Fund (ERDF), the European Social Fund (ESF), the European Agricultural Fund for Rural Development (EAFRD), and the European Maritime and Fisheries Fund (EMFF). Those common provisions applied to these funds during the previous programming period, 2014-2020. The new EU budget, 2021-2027, implemented new rules (the CPR) which shuffled various funds around, incorporating the Asylum and Migration Fund, the Internal Security Fund and the Border Management and Visa Instrument into this novel legislative package and replacing ESF with ESF+. Additionally, a novel financial instrument within Cohesion Policy aimed at implementing the European Green Deal, the Just Transition Fund (JTF), was included. As a result, Cohesion Policy is now ‘7+1’ given the shuffling of funding regulations and the new JTF. Thus, the common rules applicable to these eight funds are put into a single legal framework. Is this simplified or rather complex?
On the one hand, the seven funds under the shared management are, for the first time, covered into a single rulebook. Some provisions are either cut, incorporated to the main of text of the CPR or its Annexes which may seem to be the 1st step toward simplification of the Cohesion Policy legal framework.
However, it must be remarked that each of these funds has its own specific rules which are not explained in the new CPR. In this regard, Member States cannot rely on further guidelines from the European Commission if they need explanation of specific rules applicable to a particular Fund. Comparing the programming period 2014-2020, the Commission is now reducing the number of guidelines issued to Member States. The two exceptions from this concern are the new guidance note on the prevention of Conflict of Interest and updating the guidelines on the Simplified Cost Options (SCOs). Importantly, however, the Commission’s guidelines have been essential for Member States to adequately interpret specific Cohesion Policy rules. Consequently, the lack of these further guidelines may lead to misapplication of certain CPR’s ‘components’, taking its toll on compliance. It must be noted that Cohesion Policy is a large domain of the EU budgetary expenditure that is particularly subject to compliance problems as evidenced by a high level of error rate. Put differently, error implies incorrect calculation or an irregularity (i.e. breach of the rules applicable to the EU budget) arising from non-compliance with legal and contractual requirements. Thus, this new Commission’s ‘guidance strategy’ seems to put into question the interpretation of the new Cohesion Policy rules without the further guidelines on specific funds. Laid out clearly: correctly interpreting rules and regulations is critical to ensuring good compliance.
More use of the Simplified Cost Options (SCOs) encouraged
Also added in the new 2021-2027 legislative package, Member States are now encouraged to extensively use the SCOs, identified as a key simplification measure. The SCOs change how eligible expenditures are reimbursed under Cohesion Policy projects. Thus, instead of reimbursing these expenditures based on invoices and receipts, payments are calculated according to flat-rate reimbursement, unit costs or lump sums. The question remains, however: How can policy encourage Member States to extend their use of the SCOs?
First, a network of SCOs practitioners as well as TAIEX REGIO PEER 2 PEER help raise awareness of the use of these simplification measures serving as fora for sharing best practices and concrete examples. Second, DG REGIO and the European Institute of Public Administration (EIPA) provide training opportunities for Member States’ authorities on how to increase the SCOs uptake properly. Indeed, the extended use of the SCOs can help reducing the administrative burden as well as error rate in the Cohesion Policy funds spending.
Conclusion? Further discussion from Cohesion Policy experts warranted.
The new Cohesion Policy features significant changes in its legal framework. At first glance, it would seem that putting the eight funds into one single book does make Member States’ life easier to manage and implement these funds properly. However, merging more funds into one common regulation without outlining further specific provisions to each fund may inevitably create more complexity. Conversely, member states encouraged to use more SCOs appears to be a key simplification tactic in Cohesion Policy 2021-2027 to stimulate good management of the funds. Further discussion on the implementation and evaluation of Cohesion Policy 2021-2027 will unveil the opportunities and pitfalls that this new legislation package presents.
Julia Walczyk is a Master’s student of European Public Affairs and a student research assistant at the Political Science Department of Maastricht University. She obtained her Bachelor’s degree in European Studies at Maastricht University in 2020.
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