‘Cohesion policy’ is the policy behind the hundreds of thousands of projects all over Europe that receive funding from the European Regional Development Fund (ERDF), the European Social Fund (ESF) and the Cohesion Fund (Cohesion Fund applies to EU Member States which have a GDP lower  than 90 % of the EU-27 average – Croatia not taken into account).

Economic and social cohesion – as defined in the 1986 Single European Act – is about ‘reducing disparities between the various regions and the backwardness of the least-favoured regions’. The EU's most recent treaty, the Lisbon Treaty, adds another facet to cohesion, referring to ‘economic, social and territorial cohesion’.

The idea is that cohesion policy should also promote more balanced, more sustainable ‘territorial development’ – a broader concept than regional policy, which is specifically linked to the ERDF and operates specifically at regional level.

In the 2014-2020 budgetary period, coordination and coherence between cohesion policy and the other EU policies contributing to regional development, namely rural development and fisheries and  maritime policy, has been strengthened by laying down common provisions for the ERDF, the ESF, the Cohesion Fund, the European Agricultural Fund for Rural Development (EAFRD), and the European Maritime and Fisheries Fund (EMFF). All five funds together are known as the European Structural and Investment (ESI) Funds.

Each EU country has a different way of dividing its territory into administrative units. For the purposes of managing programmes and comparing statistics, the EU devised the NUTS system - dividing each country into statistical units (NUTS regions). The EU is currently divided into 274 ‘NUTS 2 level’ regions (from 800.000 to 3 million inhabitants).

NUTS regions are not the same as ‘Euroregions’, which are in fact associations with no precise legal status, dating back to the period after the Second World War when local politicians in border regions tried to promote common interests on both sides of the border. Euroregions are separate from the EU, though they are often involved in European regional cooperation projects. Euroregions are represented by the Association of European Border Regions.

The regulations which determine the amounts available for cohesion policy for 2014-2020 came into force on 21 December 2013, as part of the ‘financial perspective’, the seven-year European budget. €351.8 billion were set aside for cohesion policy measures in the 28 EU member countries for 2014-2020, which is about one third of the EU budget. National governments negotiated how the funds should be distributed in the EU Council and, even though all regions still benefit from cohesion policy, priority was given to countries and regions whose development was lagging behind. More than half of the budget – €182.2 billion – has been set aside for less developed regions, which have a GDP of less than 75 % of the EU-27 average. €35 billion has been allocated to transition regions, which have a GDP of between 75 % and 90 % of the EU average, and €54 billion to more developed regions which a GDP of more than 90 % of the EU average.

Member States then use the funds to finance programmes – thematic programmes covering the whole country (on the environment or transport, for instance) or regional programmes channelling funds to a particular part of the country.

Find out if your region is covered in 2014-2020

You can obtain financing from the ESI Funds regardless of what region you are in. The Commission is not involved in selecting projects (except for a small number of large-scale projects) – this is done by the national and regional authorities responsible for managing the programmes drawn up to implement cohesion policy for 2014-2020.

These ‘managing authorities’ lay down selection criteria, organise selection committees and – via a project tendering procedure open to all – decide which projects will receive European funding.

EU grants, funds and programmes

There are many potential recipients who would qualify if they applied, but who are unaware that they are eligible – businesses (especially small businesses), public bodies, associations, and individuals. All projects will be considered provided they meet the selection criteria decided on by the managing authority for the relevant programme. Foreign firms with a base in Europe are also eligible. Under the rules for the 2014-2020 programming period, each EU country must publish up-to-date lists of all those receiving assistance from the ESI Funds.

The rules specify certain categories of eligible expenditure. For the 2014-20 programming period, the Common Provisions Regulation specifies 11 thematic objectives which will be supported by the cohesion policy funds. A significant part of spending has to be focused on these priorities, which cover topics such as research and innovation, support for small and medium sized enterprises (SMEs), environment, transport, employment, training, and public administration. National and regional authorities specify in their operational programmes how they intend to distribute the available funding between the main themes. The national strategies are set out in so-called Partnership Agreements.

Read more about the fields of activity of EU cohesion policy.

Through its 11 thematic objectives, cohesion policy helps deliver the goals of the Europe 2020 strategy, the EU’s growth strategy to deliver smart, sustainable and inclusive growth. The cohesion policy funds will be the main investment tool for measures supporting employment, innovation, education, inclusion, and the shift towards a low-carbon economy.

Both the European Regional Development Fund (ERDF) and the European Social Fund (ESF) support a number of main priorities under the thematic objectives, and a certain amount of financing is allocated to these priorities. Less developed regions have to concentrate at least 50 % of their ERDF funding and 60 % of ESF allocations on these objectives; the figures are 60 % and 70 % respectively for transition regions, and 80 % for more developed regions.

In order to maximise the impact of the available funding, the focus on results has been strengthened in the 2014-20 programming period, and certain conditions must be in place before funds can be channelled. These so-called ex ante conditionalities ensure that the right preconditions are in place for cohesion policy spending to have a real effect in the region.

• The INTERREG initiative has been incorporated into European Territorial Cooperation.
• The objectives of URBAN (urban development) and EQUAL (employment) are now covered by the mainstream cohesion policy.
• Leader+ and the European Agricultural Guidance and Guarantee Fund (EAGGF) have been replaced by the European Agricultural Fund for Rural Development (EAFRD), while the Financial Instrument for Fisheries Guidance (FIFG) and European Fisheries Fund (EFF) is now the Maritime and Fisheries Fund (EMFF).
• Since the 2007-2013 programming period, the Instrument for Pre-Accession Assistance (IPA) has taken over from the various schemes covering Turkey and the Balkans, e.g. PHARE, ISPA, Sapard, CARDS, and the Financial Instrument for Turkey. The regional development and cross-border cooperation strands of the IPA continue to act as forerunners to cohesion policy for countries that may be joining the EU.
• JASPERS, JEREMIE, JESSICA and JASMINE: These four special support instruments were developed in the 2007-13 programming period in cooperation with the European Investment Bank, partly as financial engineering instruments and partly to provide technical assistance. In the light of the current economic situation and the increasing scarcity of public resources, financial instruments are expected to play an even stronger role in cohesion policy in the 2014-2020 programming period.

National and regional authorities have to meet certain basic requirements before any project can be granted money from the ESI Funds. To start with, they must identify which body will perform the following functions for each national and regional programme:

• managing authority – ensures that conditions for awarding grants have been met and regularly checks that spending plans are adhered to;
• certifying authority – submits statements of expenditure and payment requests to the Commission. It checks that payment requests are accurate and based on reliable accounting systems that comply with national and European rules;
• audit authority – audits systems and checks projects. It informs the managing and certifying authorities of any gaps or irregularities it may have detected in spending.

When significant weaknesses are detected, the Commission and the national authorities will agree on a plan of action to redress the situation. If the national authorities do not take prompt action, the Commission may stop or suspend payments. The Commission also takes account of audits by the European Court of Auditors and investigations by the European Anti-Fraud Office (OLAF). 

Cohesion policy makes a real difference, investing huge sums in some countries (up to 4 % of their GDP). Now, as the new programming period gets underway, the national authorities have set quantifiable objectives (in their national strategic reference frameworks).

Alongside the Commission they are measuring the effect that programmes are having. Every three years, the Commission publishes a Cohesion Report giving an account of how regions are developing and what effect cohesion policy is having. It also produces annual interim reports.

Impact and results – growth and jobs in the EU in 2007-2012

• Increasing per capita GDP in the EU’s least developed regions – GDP per capita in the so-called Convergence Regions increased from 60.5 % of the EU-27 average to 62.7 % between 2007 and 2010.
• It is estimated that cohesion policy generated an additional 600.000 jobs from 2007 to 2012, at least one third of them in small and medium sized enterprises (SMEs).
• 25,000 km of roads and 1.800 km of rail were constructed or modernised in 2007-2012 to help establish an efficient trans-European transport network (TEN-T).
• 200,000 SMEs received direct financial support, and cohesion policy helped 77 800 start-ups to get up and running.
• Over 60,000 research projects were supported in the period 2007-2012.
• 1.9 million more people now have broadband access.

Measuring the impact and results of cohesion policy is critical to its ongoing success. It enables us to demonstrate the achievements of the policy to European citizens. It also offers the opportunity to learn from good practices and to continuously improve projects and programmes.