ESIF Common Provisions Regulation: what’s new for 2020?

The European Commission released in May its proposal for a new CPR applying to post-2020 financial perspectives. The current CPR (1303/2013) remains in place and the new CPR applies to the 2021-27 implementing period. However, it introduces some new elements that can be applied right now thanks to the OMNIBUS Regulation that was just fully approved.

So, let’s look at the main proposed new elements!

The Regulation starts with an introduction quoting “over-complex and fragmented approach” of EU Funds – what a starting point – and then insists on key simplification measures that will need to be anticipated to be fully ready and applied in 2020. The new CPR has looked for simplification opportunities at all stages of the programme management cycle and has come up with some significant initiatives in the following areas:

Programming

  • Initial resource allocation for 5 years – the final 2 years to be planned based on interim success
  • Overall 25% of the funds focused on climate mainstreaming
  • Emphasis on greater synergies between the instruments
  • Thematic concentration increased by reducing the 11 thematic objectives to 5 thematic strategies
  • Preconditions are now “enabling conditions” to be monitored over the lifetime of the programmes
  • Flexible adjustment of programmes (up to 5%)

Implementation

  • Improvements to CLLD and ITIs
  • Significant increase in emphasis on the use of Simplified Cost Options
  • More “off the shelf” options building on the Omnibus
  • A preference for technical assistance to be reimbursed on the basis of flat rates

Monitoring and evaluation

  • Performance reserve is discontinued
  • The Omnibus has introduced new and clearer definition of “outputs” and “results”
  • The CPR proposed new evaluation criteria as follows: relevance, effectiveness, efficiency, EU added value, and coherence with other EU policies.
  • Evaluations to include interim lessons learned, problems and opportunities the improve the actions and their impacts.

Verification and Audit

  • Rollover of management and control systems
  • Extension of the single audit principle
  • Proportionate verification arrangements where low risk programmes can rely on national control systems
  • N+2 rule
  • Reduction in prefinancing rates.

Full steam on Simplified Costs Options (SCO)

That’s the most important part, with the obligation to use an SCO for operations up to 200 000 € total costs (apart from State Aid): the possibility of simplification is now becoming binding for small projects.

Attached to this, the possibility to agree on a draft budget on a case by case basis as an SCO method. In concrete, that means for authorities and beneficiaries to agree on concrete outputs / results before the start of each “small” project (or to justify why this is not possible…)!

To be noted, the introduction of a possible flat rate of 20% for the calculation of staff costs: does it mean we can forget timesheets? Maybe not if this option is not applicable in case of important Public Procurement.

The ultimate objective is to reduce administrative costs by 20-25% (below 3% of total costs) with all these SCOs, taking into account the possibility to apply them right now thanks to OMNIBUS.

Single audit principle

This was another long-standing request from Member States: to take better account of previous audits – whatsoever the source – and base the new audits on risks.

Scope enlarged and simplified

ESIF are now grouped not only with EMMF, but also with:

  • AMIF:  Asylum and Migration Fund
  • BMVI:  Border Management and Visa Instrument
  • ISF:  Internal Security Fund

The common strategy is simplified, in parallel moving from Eleven thematic objectives used in 2014-2020 to 5:

  1. A smarter Europe – innovative and smart economic transformation.
  2. A greener, low-carbon Europe.
  3. A more connected Europe – mobility and regional ICT connectivity.
  4. A more social Europe – implementing the European Pillar of Social Rights.
  5. Europe closer to citizens – sustainable and integrated development of urban, rural and coastal areas through local initiatives.

To be noted, ESF is becoming ESF+ raising the point of alignment of rules and tools of ESF to those of ERDF (including the same definition of indicators and results-oriented logframe).

Better monitoring

“Ex ante conditionalities” in the 2014-2020 period are replaced by “enabling conditions”. The general monitoring is supposed to be closely linked to the European semester and also put in line with Country-Specific Recommendations (CSRs): this is an important point to be considered and included before mid-term reviews. Evaluation should be based on evaluation plans. Only evaluation of the impact of the programme before 2029 is now compulsory.

Simplification and flexibility

5% of funds can be moved between priorities and Technical assistance can now be reimbursed as a flat rate, which was also a long-standing request from Managing Authorities.
A new flat rate of 7% of direct costs for indirect costs is also introduced (in line with Omnibus) without requiring any justification, and so is the one of 15% of staff costs.
Specific rules for revenue and major projects are out!
And “seal of excellence” from H2020 is recognised as a good way to simplify selection for the operations classified as such.

Open issues

There are still some open issues in terms of synergies. How to ensure full consistency of rules and priorities with Common Agricultural Policy (CAP); Horizon Europe; the Connecting Europe Facility (CEF); the Digital Europe Programme (DEP); the InvestEU Fund; LIFE; Erasmus+ and with the External Instrument?

Regarding targets and instruments, the question is still how the programme integrates the “territorial dimension”? What about SMUA (Small and Medium Urban Areas) and the use of ITI / CLLD which are still encouraged into the new Regulation?

State aid, that’s the ultimate stake: how to combine H2020 – without state aid – and ESIF – with a full application of state aid rules? Generally, the key question about state aid is how to make the “negative” exemption as a “positive” rule and organise a more efficient and active support to the economy.

By Franck Sottou and Colm Dunne


CPR proposal for 2021-2027