The UK government published its 'balance of competences review' of cohesion policy over the summer of 2014. The exercise was designed to assess the EU's efforts to reduce regional disparities against what might have been achieved if the UK acted alone. Central to the review was the perennial question – would the UK be better off not contributing to and not receiving EU structural and investment funds (ESIF)?
The review came to no firm conclusions but served as a useful stock-taking exercise. While there were interesting elements of analysis and plenty of statistics, the review was politically empty. It made neither an argument in favour of repatriating the funds nor made the case for the added value a pan-EU approach can give. The timing of the review is linked to David Cameron's work on the need for reform at EU level. However, in practice, the review concluded far too late to influence the 2014-20 funding round and far too early to influence the post 2020 round.
"Well over a third of the EU's €1tn budget is spent on cohesion policy and the UK has the widest disparities in regional development of any EU country"
This is unfortunate as the stakes remain high. Well over a third of the EU's €1tn budget is spent on cohesion policy and the UK has the widest disparities in regional development of any EU country, due largely to the success of its capital. It is evident that the trickle down effects from London's economy do not, however, stretch as far westwards or as far northwards as they might. The UK still has two of the poorest regions in the EU: Cornwall, and West Wales and the Valleys.
I suspect there are a number of reasons why regional imbalances are stronger than ever in the UK and why cohesion policy, despite funding many vital local projects across the country, has not managed to dent the macro-economic effects which continue to see growth concentrated in certain regions.
Firstly, it is a question of scale. The UK will receive €9.4bn in ESI funds over the 2014-20 period. While this is far from a trivial amount, it is dwarfed by domestic spending – the one single 'crossrail' project in London will cost twice this at €18bn for example. For a typical local authority EU funding will account for much less than one per cent of their overall spend.
Secondly, cohesion policy is being pulled in more directions than ever. It comprises no fewer than 11 'thematic objectives' ranging from SME support, promoting research and innovation, environmental measures, through to tackling social issues, skills, transport and high-speed broadband. It is trying to be all things to all regions, and perhaps serving none as well as it might.
Thirdly, the EU's cohesion policy, while trying to address need in the poorer regions, also aims to promote economic opportunity in richer regions. It is neither a truly redistributive policy, nor a whole-hearted investment policy. The question marks over the cohesion policy's focus are a result of the desire in Brussels to ensure each and every EU region has a stake in the policy – Euro-idealism perhaps overriding economic reality. In any case, I suspect other factors such as the promotion of free-trade and the single market have done much more to promote growth in Europe than cohesion policy itself.
I found the most useful part of the British government's review to be the exploration of bureaucracy in the funds. The European court of auditors noted 'the arrangements for cohesion spending are complex. There are six layers of rules (common provisions, general provisions, fund-specific provisions, delegated acts, implementing acts, and commission guidelines). National legislation will, in some cases, constitute an additional layer. I would add that state aid and public procurement rules also cause a great deal of misunderstanding which leads to 'errors' in the spend.
"The question marks over the cohesion policy's focus are a result of the desire in Brussels to ensure each and every EU region has a stake in the policy – Euro-idealism perhaps overriding economic reality"
The solution, I believe, is a greater harmonisation of the EU regulations and processes to ensure that beneficiaries have a common and consistent experience no matter which fund they apply for. This means a standardised approach to applications, timescales and selection procedures across the funds and simplified management and audit procedures behind the scenes. In short there is a need to 'hide the wiring' from the beneficiary, be they the business community or voluntary groups. At the moment many smaller applicants can't simply 'plug into' a range of different funds – they need to hire a qualified 'electrician' in the form of a consultant.
A further step, which the EU rules foresee, which has been met with little enthusiasm at the national level in the UK, is to combine the funds so that an EU supported construction project, for example, could also train apprentice builders with a single project application. The 'integrated territorial investment' tool envisaged for Cornwall may allow this, but otherwise it looks like the silo approach (the same project having to apply to different funds managed by different government departments) will continue to prevail.
Finally, the review rightly notes that locally driven decision-making and project selection is key to allowing the funds to be responsive to the real needs of local areas. Local government and other stakeholders viewed this as key to achieving an accessible programme that attracts applications from all sectors, including those new to European funding. In England we are particularly well placed to do this due to the relatively recent creation of 39 local enterprise partnership areas which are each joint partners with government in delivering the 2014-20 programme.
As to the UK government's longer-term vision for cohesion policy and what it might say as we head towards 2020, we learnt little from the balance of competences review.