EU Structural and Cohesion Funds

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Business   2000 National Development Plan

EU STRUCTURAL AND COHESION FUNDS Childcare Centre Drumshambo Co.Leitrim

THE EUROPEAN UNION

EIGHTH edition

EUROPEAN REGIONAL POLICY - BOOSTING ECONOMIC DEVELOPMENT European Regional Policy Policy is a policy of promoting solidarity. solidarity. It allocates more than a third of the EU budget to reduce the development gaps among the regions and the disparities among EU citizens.The EU uses the policy to help lagging regions to catch up, restructure declining industrial regions,diversify the economies of rural areas with declining agriculture, and revitalise declining ng city neighbourhoods. It sets job creation as its primary concern. In a word, it seeks to strengthen strengthen the economic economic and social and territorial ‘cohesion’ ‘cohesion’ of the EU.  M1 Boyne Bridge

In 2004, European Union (EU) membership increased increased from 15 to 25 Member States. States. When two more countries (Bulgaria and Romania) join in 2007, the EU will have a population of approximately half a billion. All EU countries are committed committed to peace, democracy democracy,, the rule of law,and respect for human rights; and they work together to promote these values in the wider world. To become more competitive and prosperous,the EU is creating new and better jobs and giving its citizens new skills.In partnership with its near neighbours, the EU is also working to spread prosperity and progress beyond its borders.

THE COMMUNITY BUDGET The EU has to plan its work well in advance and ensure that it has enough money to pay for its objectives.The main EU institutions (Parliament,Council, and Commission) agree in advance on the priorities for the next few years and develop a spending plan or financial perspective.A financial perspective states the maximum amount the EU can spend, spend, what it can spend it on,and where the money will come from.The current financial perspective perspective runs from 2000-2006. Over the course of  time,the EU budget has changed to reflect different different priorities within the EU. The EU budget is a mix of its own resources and direct contributions by Member States.The EU’s own resources are revenues from levies on agricultural imports, customs duties on other imports, and a portion of value-added tax (VAT) (VAT) income. In 2003, the EU’s own resources resources accounted for one one quarter of the revenue of the overall EU budget. Contributions from Member States account for three quarters of the EU’s revenue.Member States contribute a percentage of gross national income . As this is a measure of national wealth,the formula ensures that each country contributes according to its means.The money is then spent where it is needed most.

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EU money is used to support a whole range of EU policies.The largest portion of  the budget is allocated to agriculture, agriculture, which now accounts for 45% of EU spending. Regional Policy which is implemented through investment by the Structural and Cohesion Funds represents the second largest budget item, taking approximately approximately one third of total expenditure.The remaining EU money is spread across a wide range of policies including helping the Third World, emergency aid assistance, educational and training programmes,research and development,health and consumer protection, to mention a few.

Since 2000, Regio Regional nal Policy icy has provided considerable assistance  to the econom economic ic developme development nt of the countries applying for  accessionn to the EU. On 1 accessio Mayy 200 Ma 2004, 4, 10 ne new w Member States joined the EU.This major event was a historic opportunity for  Europe and a challenge for  Regional Policy. Policy. On that day,  the range range of disparities ties within thin the the EU was enlarged. enlarged. It is necessary for   the EU to respond respond to the enormous enormous needs needs of the new Member States and also to the difficulties that remain in the rest of the Union. The monies used for implementing Regional Policy and boosting economic development are the Structural and Cohesion Funds.

EU Structural Funds The Structural Funds were created to help those regions within the EU whose development is lagging behind. The Structural Funds aim to: ◗ develop infrastructure,such as transport and energy; ◗ aid regions affected by industrial decline; ◗ support the development of rural areas; ◗ extend telecommunications services; ◗ provide training for workers; unemployment;t; ◗ combat long-term unemploymen ◗ disseminate the tools and know-how of the information society;and development. ent. ◗ promote research and developm

The Four Funds The EU Structural Funds consist of four individual funds.The funds work   together by supporting different different aspects of regional development. development. Promotes economic and social cohesion within the EU by reducing imbalance between regions or social groups.I n Ireland,t he ERDF provides des support for road development, public transport projects such as LUAS and Quality Bus Corridors (QBCs), micro-enterprise development through  the County County Enterprise EnterpriseBoards,Tourism Proje Projects,and cts,and waste manage management. ment. 2. Europe European an Social Social Fund - Aim Aimss to help, help, pre preven vent,t, and combat combat unemployment; to equip Europe's workforce to face new challenges; and to keep people people in contact contact with the labour market. market. In Ireland, Ireland, the ESF supports supports the National National Employm Employment ent Service Service (FÁS), School Completion Initiatives, Early School Leavers,Third Level Access Initiatives, Skills Training and Traineeships, Traineeships, In Company Training and Life-long Learning Initiatives, Promotion and Monitoring of Equal Opportunities, and Childcare Training and S taffing . 1. Europ European ean Regional Developm velopment ent Fund (ERDF) -

3. Europe European an Agriculture Agriculture Guidance Guidance and Guarantee Guarantee Fund -

Contributes to the structural reform of the agricultural sector and the development opment of rural areas. In Ireland, Ireland, the EAGGF EAGGF supports rural development opment through the LEADER programme. Other initiatives initiatives supported include Farm Waste Management, Improvement of Dairy  Dairy  Hygiene Standards and Forestry. 4. Financial Instrumen Instrumentt for Fisheries Fisheries Guidance - Supports the structural reform reform of the fisheries es sector.In Irelan Ireland, d, the fund supports development of fisheries harbours, aquaculture development,measures  to adjust the fishing fleet, fleet, renewa renewall and modernization modernization of the whitefish sh fleet and smaller scale inshore vessels, support for conservation and stock management, management, fish processing,and trainin training. g.

THREE OBJECTIVES Regions within the EU are classified for financial support depending on the economic difficulties  they encounter encounter.There .There are three three types types of regions (Objectives) that receive financial support from Structural Funds.The most significant Objective (in terms of resources allocated) is Objective 1. Objective 1 –  Helping

regions whose development is lagging behind to catch up, development i.e., provid providing ing them them with th the basic infrastructure or encouraging investments in business economic activity. activity. Some 50 regions, representing 22% of the EU’s population are included.

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Objective 2 –  Supporting economic and social conversion of industrial,

rural, urban, or fisheries-dependent areas facing structural difficulties. Approximately 18% of the EU’s population live in these areas. Modernising systems for training and promoting employment. Objective 3 covers the whole EU, except for the 50 Objective 1 regions where funding for training and employment are included in the funds already allocated. Objective 3 – 

IRISH REGIONS In previous rounds of funding, the whole of Ireland was classified as an Objective 1 area.Given the country’s good economic performance, parts of  Ireland have now exceeded the eligibility criteria for Objective 1 status. Therefore,for the NDP 2000-2006, Ireland has been divided into two regions: 1. Border, Midlands,and Western Region (BMW) 2. Southern and Eastern Region (S&E)

 ALLOCATION OF STRUCTURAL FUNDS

The Cohesion Fund was established in 1993 to complement the Structural Funds. It was intended to help the EU’s poorer countries prepare for  economic and monetary union. At that time, the four Member States whose GNP per capita was less that 90% of the EU average - Greece, Ireland, Portugal, and Spain – originally qualified for the fund. Today, the Cohesion Fund covers projects in all new Member States: Cyprus, Czech Republic,Estonia,Hungary,Latvia,Lithuania, Malta, Romania,Slovakia, and Slovenia. Following a review of the Cohesion Fund in 2003, Ireland no longer qualifies for support due to the improvements in our economy.

In order to receive Structural Funds,Member States must submit a plan to  the European Commission outlining: ◗ The social and economic situation in the region ◗ The priorities and strategy for use of Structural Funds ◗ The financial resources of the applicant Member State.

The Cohesion Fund assists individual projects in the fields of environment and transport infrastructure e.g., roads, ports,airports, water supply,and waste water treatment projects.

The submitted plan forms the basis of negotiations between the Member  States and the European Commission and results in an agreement known as a Community Support Framework document or a Single Programming Document. These documents set out the actions, objectives, targets, anticipated financial resources,monitoring, evaluation,and control systems  to be set in place to manage the EU funds.

REGIONAL & COHESION POLICY IN IRELAND Since joining the EU in 1973,Ireland has received approximately 17bn in EU Structural and Cohesion Funds (to end 2003).

Therefore,t o apply for grants in a relevant sector, an individual,company, or organisation should contact the appropriate Government Department or State Agency.

THE COHESION FUND

EU funding is not provided to allow countries make savings in their own national budgets. Member States must follow guidelines that apply   throughout the EU.

There have been three programming periods for EU Structural Funds 1989-1993, 1994-1999, and the current period 2000-2006.The next period will run from 2007-2013.

For example, the National Roads Authority is responsible for expenditure under the National Roads measure, FÁS has responsibility for social economy projects, and the Department of Environment & Local Government for water services.

FUTURE POLICY  The current round of EU Structural Fund supported programmes will finish at the end of 2006. The debate on the next round of  programmes has already commenced. In February 2004, the European Commission presented the ‘Third Report on Economic and Social Cohesion’,which sets out its vision for the period 20072013.The European Commission has also outlined its proposal for   the next financial perspectives for the period 2007-2013, which included 336bn for Cohesion Policy.Member States and the EU now need to reach agreement on the budget, eligible regions, and priorities for funding for the next period of Structural and Cohesion Funds.

Glossary  Gross National Income: The total value of all goods and

services produced within a nation over a specified period of  time,representing the sum of wages,profits,rents,interest, and pension payments to residents of the nation.

IRELAND & THE COHESION FUND

IMPLEMENTATION OF THE NATIONAL DEVELOPMENT PLAN IN IRELAND The NDP is divided into separate programmes; two regional,three InterRegional (or national) and a separate PEACE programme which operates in the Border Counties and Northern Ireland.

Like other Member States, the Irish Government submitted plans outlining investment priorities for each funding period. Ireland’s plan is known as a National Development Plan (NDP). The current NDP is Ireland’s third investment plan.Total investment under the two previous plans amounted to approximately 30bn, with the Structural Funds and Cohesion Funds contributing 11.3bn and the balance sourced from the Irish Exchequer.This financial support has enabled Ireland to proceed with its planned upgrade of   the roads network,education and training,and the support for industry.

Regional Programmes ◗ Border Midland and Western (BMW) ◗ Southern and Eastern (S&E)

Under the current NDP, Ireland will receive 3.35bn from the Structural Funds. The Cohesion Fund contributed 586m to Ireland during the period 2000-2003.The current NDP differs from previous plans in that it is not designed just to obtain EU funds. The NDP involves planned investment of 57bn with the majority of the funding coming from the Exchequer.The NDP uses the EU approach to planned investment and has applied it to a wide range of Government expenditure.

PEACE II – supports the Peace Process in Northern Ireland and the border counties of Donegal, Monaghan,Cavan, Louth, Sligo,and Leitrim. Each programme is divided into sub-programmes and measures which outline the specific funding initiatives.

Inter-Regional (National Programmes) ◗ Employment and Human Resources Development ◗ Productive Sector  ◗ Economic & Social Infrastructure

 While overall responsibility for the implementation of the NDP rests with the Department of Finance, each programme is administered by a Managing Authority. The Managing Authority delegates implementation to an Implementing Body in most cases a Government Department or State Agency.

During the period 1993 to 2003,the Cohesion Fund invested some 2bn in more than 120 infrastructure projects in Ireland. By their nature these projects can be expected to continue to yield benefits for the Irish economy. In the last 10 years, a total of 36 Irish road projects received Cohesion Fund assistance. Major road projects were the M50 (Dublin Ring Road), M1 (Dublin-Belfast) and improvements on the N4 (Dublin-Sligo), N7 (Dublin-Limerick) and N11 (Dublin-Rosslare). Rail sector projects included the upgrading of main rail corridors including  the cross-border route to Belfast,an extension of the DART service in the Dublin area,and the re-development of Heuston Station in Dublin. Irish seaports projects included the Cork Passenger Ferry, dredging at Waterford Port, and Roll On/Roll Off Berths at Dublin Port. Ireland’s environment sector has experienced marked improvements as a direct result of   the Cohesion Fund projects. Specific benefits include improved water  quality, increased supply of drinking water, improvements in water  protection and water conservation. 12 water supply projects were supported and 31 waste water   treatment projects. Major projects include the Dublin Bay Project (Ringsend Wastewater Treatment Works), Cork, Limerick,Wexford, and Galway Main Drainage Schemes.

Cork Main Drainage andWaste Management

TASKS & ACTIVITIES Business 1 "Like any business entity the European Union is obliged to budget on an annual basis." From the study above or otherwise: (a) Identify the main sources of EU revenue (income). (b) Identify the main sources of EU expenditure. Economics 1 Describe the main elements of: (a) European Regional Policy. (b) European Structural Funds. 2 "A key element of all EU legislation since the Treaty of  Rome has been the desire to redistribute income to the less well off regions of the community." (a) From your reading of the above study describe how the Objectives (Regions) system redirects funds to the less well off areas of the EU. (b) How has Ireland benefited from EU funding?

National Development Plan

 www.ndp.ie  www.eustructuralfunds.ie

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