position of the commission services on the development of ... · (erdf), the european social fund...

Position of the Commission services on the development of the Partnership Agreement and programmes in the United Kingdom for the period 2014-

2020

Ref. Ares(2012)1315758 - 08/11/2012

INTRODUCTION............................................................................................................... 3

1. MAIN CHALLENGES ............................................................................................... 4

2. PRIORITIES FOR FUNDING.................................................................................... 9

2.1. Increasing labour market participation through improved labour market and education policies and reducing the risk of social exclusion........ 10

2.1.1. Increasing labour market participation through improved labour market and education policies ................................................ 10

2.1.2. Reducing the risk of social exclusion................................................ 11

2.2. Promoting R&D investment and the competitiveness of the business sector 11

2.3. Promoting an environmentally friendly and resource-efficient economy .......................................................................................................... 12

3. SUCCESS FACTORS FOR EFFECTIVE DELIVERY........................................... 13

4. PRIORITIES FOR EUROPEAN TERRITORIAL COOPERATION...................... 13

ANNEX ............................................................................................................................. 15

FUNDING PRIORITY: INCREASE LABOUR MARKET PARTICIPATION THROUGH IMPROVED LABOUR MARKET POLICIES AND REDUCING THE RISK OF SOCIAL EXCLUSION .............................................. 17

FUNDING PRIORITY: PROMOTE R&D INVESTMENT AND THE COMPETITIVENESS OF THE BUSINESS SECTOR ........................................... 21

FUNDING PRIORITY: PROMOTE AN ENVIRONMENTALLY FRIENDLY AND RESOURCE-EFFICIENT ECONOMY.......................................................... 23

ADMINISTRATIVE ARRANGEMENTS....................................................................... 27

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INTRODUCTION

The European Union faces the daunting challenge of emerging from the crisis and putting economies back on a sustainable growth path. Such an exit strategy entails restoring sound public finances, making growth-enhancing structural reforms and targeting investments for growth and jobs. For the latter, the CSF Funds1 can make an important contribution to sustainable growth, employment and competitiveness and increase the convergence of less developed Member States and regions with the rest of the EU.

To ensure that the CSF Funds deliver long-lasting economic and social benefits, the Commission has proposed a new approach to the use of the Funds in its proposal for the 2014-2020 Multiannual Financial Framework.2 Strong alignment with the policy priorities of the Europe 2020 agenda, macroeconomic and ex-ante conditionality, thematic concentration and performance incentives are expected to result in more effective spending. It is an approach that underlines the need for strong prioritisation and results and which moves away from a culture of entitlement. The CSF Funds will thus provide an important source of public investment and serve as a catalyst for growth and jobs by leveraging physical and human capital investment while serving as an effective means to support implementation of the Country-Specific Recommendations issued in the context of the European Semester. This approach is in line with the European Council’s conclusions of 29 June 2012 regarding the use of the EU budget.3

The CSF Funds should aim to jointly foster competitiveness and convergence by setting the right country-specific investment priorities. What is needed is a general refocusing of spending towards research and innovation, support for SMEs, quality education and training, inclusive labour markets fostering quality employment and social cohesion, maximising of productivity gains, mainstreaming of climate change to achieve the 20% objective proposed in the MFF and shifting to a resource-efficient low carbon economy. To this end, the planning and implementation of the CSF Funds has to break through artificial bureaucratic boundaries in the next programming period and develop a strong integrated approach for mobilising synergies and achieving optimal impact both within countries and across borders, particularly in the context of strategies such as the Atlantic strategy for maritime policy. The Europe 2020 objectives must be mainstreamed across the different CSF Funds, each of them contributing to smart, sustainable and inclusive growth. Moreover, the CSF Funds have a key role to play in supporting financial instruments that can leverage private investment and thus multiply the effects of public finance. In short, we need a carefully targeted and results-oriented use of the Funds that maximises their combined impact.

The purpose of this position paper is to set out the framework for dialogue between the Commission and the United Kingdom on the preparation of the Partnership Agreement

1 The EU Funds covered by Staff Working Document (2012) 61 final of 14 March 2012 — Elements for

a Common Strategic Framework 2014 to 2020 — are the European Regional Development Fund (ERDF), the European Social Fund (ESF), the Cohesion Fund (CF), the European Agricultural Fund for Rural Development (EAFRD) and the European Maritime and Fisheries Fund (EMFF).

2 COM(2011) 500 final, COM(2011) 398 final and COM(2012) 388 final.

3 Conclusions of the European Council of 29 June 2012 (EUCO 76/12), http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/131388.pdf.

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and programmes due to start in the autumn of 2012. The paper sets out the key country-specific challenges and presents the Commission’s preliminary views on the main funding priorities in the UK for growth-enhancing public expenditure. It calls for optimising the use of the CSF Funds by establishing a strong link with productivity and competitiveness-enhancing reforms, leveraging private resources and boosting potential high-growth sectors, while emphasising the need to preserve solidarity within the EU and ensuring the sustainable use of natural resources for future generations. There is also a need to concentrate future EU spending on priority areas to maximise the results to be obtained, rather than spreading funding too thinly. EU funding should also be used to support EU-level priorities and to ensure that the UK can draw the full benefit from its EU membership. Therefore, the Commission proposes to group and target EU funding to the key challenges outlined in this position paper. National public spending can be used not only for co-financing but also to finance investments that complement EU-funded projects, in particular at regional and local level.

The starting point of the Commission’s considerations is the assessment of the UK’s progress towards its Europe 2020 targets in its Staff Working Document on the 2012 National Reform Programme and Convergence Programme, underpinned by the country-specific recommendations issued by the Council on 10 July 2012 and country-specific development challenges. The position paper takes account of the lessons learnt so far during the 2007-2013 programming period and the Commission’s legislative proposals for 2014-2020.

In a context of fiscal discipline, this position paper encourages the UK to develop and implement medium-term strategies capable of facing the challenges ahead, notably globalisation, while helping preserve the European social model. Moreover, it sets out a flexible framework for the UK to react and to refocus European, national and local resources on creating growth and employment so that fiscal sustainability and growth-friendly policies go hand-in-hand.

Finally, it invites the UK to exploit to the maximum potential synergies between the CSF Funds and with other sources of EU funding in a strategic and integrated approach.

1. MAIN CHALLENGES

The UK economy returned to recession in 2012, having recorded negative growth in the first two quarters of the year. The outlook for 2012 is unfavourable, with general uncertainty, fiscal consolidation and squeezed consumer incomes constraining internal demand, while a weak economy in Europe continues to affect the prospects for external rebalancing. The consensus forecast is negative growth for 2012 as a whole, signalling a worse-than-expected outturn and a deterioration in economic conditions since the spring Commission forecast, which anticipated 0.5 % GDP growth in 2012, and 1.7 % in 2013. These estimates were slightly less favourable than those of the Office for Budget Responsibility — 0.8 % and 2.0 %, respectively.

In the longer term, the Office for Budget Responsibility predicts a steady upturn in GDP growth, to 3 % annual growth in 2015 and 2016. The biggest contributors to GDP growth are expected to be private consumption and business and dwelling investment, with government spending decreasing across the spending review period. Achieving this growth will depend on significantly increased business and consumer confidence, and an increase in credit availability.

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With conditions in Europe and developed economies around the world remaining difficult, the UK must look to emerging markets to target export-led growth. The UK government has made encouraging exports a key ambition for the UK economy, as have the devolved administrations for Scotland, Wales and Northern Ireland.

The most recent data show that unemployment was 7.9% in June-August 2012, , and youth unemployment was 20.4 %. However, on a long-term basis, both figures have been increasing consistently over the past four years. Long-term unemployment has almost doubled since 2008, and now affects 2.7 % of the workforce.

Annual inflation fell to 2.2 % in September 2012, down from its peak of 5.2 % in September 2011. Inflation is likely to continue falling due to continuing weak wage growth, with the most recent Commission forecast (Spring 2012) estimating 2.9 % for 2012 as a whole and 2.0 % in 2013.

There are large regional economic disparities across the UK. Inner London is the leading European NUTS 2 region in terms of GDP per head (327.01 % of the EU average). Other regions with a high GDP per head are North Eastern Scotland (153.92 %), Berkshire, Buckinghamshire and Oxfordshire (146.75 %) and Bedfordshire and Hertfordshire (126 %). A number of regions have GDP levels per head below 90 % of the EU average, with West Wales and the Valleys (70.10 %) and Cornwall & the Isles of Scilly (73.18 %) currently among the group of less developed regions. There are also large disparities within the different regions.

Over the period between 2000 and 2009, 32 out of the 37 NUTS 2 regions experienced a decrease in GDP per capita relative to the EU average. The largest declines were registered in the West Midlands (from 113 % to 94 % of the EU average) and Bedfordshire and Hertfordshire (from 134 % to 116 %). The NUTS 2 region with the lowest GDP per capita (West Wales and the Valleys) decreased from 75 % of the EU average in 2000 to 68 % in 2009. A similar trend is seen in other regions that were, in 2000, below 90 % of the EU average (Merseyside, Tees Valley and Durham, Lincolnshire). Inner London is the only region where GDP per head significantly increased over the period in question (from 304 % to 332 %).

Between 2007 and 2011, unemployment rates increased in all regions. The highest increase was registered in Tees Valley and Durham (5.7 percentage points) and in South Yorkshire (4.5 pp.). Of the 37 regions, 13 showed some resilience in 2010 and 2011, with a limited fall in unemployment in 2009-2011 (in particular, West Midlands: -1.8 pp.).

Around eight out of ten people in the United Kingdom live in an urban area. Urban areas cover around 9 % of the UK’s land area. More than 30 per cent of the population live in cities above 1 million inhabitants, while 6 % live in centres below 5 000 inhabitants. Only 3 % of the population live in rural or remote regions. The share of severely materially deprived people is higher in densely populated areas (6.2 %) than in thinly populated areas (2.5 %).

The following table shows the current situation of the UK vis-à-vis the Europe 2020 strategy targets and reflects, where available, the relevant targets included in the UK National Reform Programme:

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Europe 2020 headline targets Current situation in the UK4

National 2020 target in the

NRP5 3 % of EU GDP to be invested in research & development 1.77 % No target in NRP20 % reduction in greenhouse gas (GHG) emissions compared to 1990

-19.1 % -34 %

Greenhouse gas emissions in sectors not covered by ETS 10 % lower than in 2005

-11.9 % -16 %

20 % of energy from renewables 2.9 % 15 % 20 % increase in energy efficiency (reduction in primary energy consumption by 2020 in Mtoe)6

./. No target in NRP

75 % of population aged 20 to 64 should be employed 73.6 % No target in NRPReducing early school-leaving to less than 10 % 15 % No target in NRPAt least 40 % of 30 to 34 year-olds should have completed tertiary or equivalent education

45.8 % No target in NRP

Reduction in the number of people in the EU at risk of poverty or social exclusion by at least 20 million (compared to 2008 levels)

Increase from 13.5 m to 14.2 m between 2007 and

2010

No target in NRP

The Country-Specific Recommendations addressed to the UK on 10 July 20127 include: improving the employability of young people, in particular NEETs (not in education, employment or training); stepping up measures to facilitate the labour market integration of people from jobless households; raising skill levels to match the economy’s demands; ensuring that planned welfare reforms do not translate into increased child poverty; fully implementing measures to facilitate access to childcare services; and improving the availability of bank and non-bank financing to the private sector, in particular SMEs.

In this context, the UK’s most pressing challenges to be addressed by the CSF Funds are decreasing labour market opportunities and the increasing risk of social exclusion, stagnant investment in R&D&I and the low availability of finance to the private sector (especially SMEs), and inefficient use of resources:

Decreasing labour market opportunities and increasing risk of social exclusion

The UK has growing challenges in terms of unemployment and labour market participation. With 20.4 % youth unemployment, the UK is currently facing low labour market participation among young people, particularly young people not in employment, education or training (NEETs). Unemployment, currently at 7.9%, continues to grow and is expected to peak in 2012. Long-term unemployment almost doubled between 2007 and 2011, reaching 2.7 % of the workforce. Many people, especially young people, are in precarious jobs (part-time or temporary). Although the average female employment rate is higher than the EU average, considerable gender gaps remain in the type of employment, with a larger proportion of women working part-time and on fixed-term contracts. Private sector employment has been growing, partly offsetting the reduction in

4 Source Eurostat and SDW (2012) 309 final. All current levels refer to 2010 except for greenhouse gas

emissions and energy from renewables, which refer to 2009, and tertiary education and early school-leavers, which refer to 2011.

5 Climate change / energy targets set in the context of the EU climate and energy package.

6 Monitoring the 20 % energy efficiency target in a harmonised format will follow implementation of the Energy Efficiency Directive in April 2013.

7 Council document 11276/12.

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public sector employment and the growth of the workforce. Specific attention should be paid to enabling labour mobility in rural and coastal areas.

The UK continues to be confronted with an excess supply of low-skilled workers with very poor basic literacy and numeracy skills, for whom demand is falling, and a shortage of workers with high-quality vocational and technical skills. The main focus of vocational education and training policy is on basic skills and level 2 qualifications, while the economy is increasingly demanding more advanced skills and qualifications. Special attention should be given to workers in sectors undergoing sectoral change such as the fisheries and maritime sector. In coastal areas, the main challenge is to ensure a transition towards new skills and jobs in sectors suffering from sectoral adjustments (for example, by facilitating the transition from fisheries and shipbuilding to marine biotechnology, maritime tourism, aquaculture, etc., which would increase employability in coastal areas). This should be done in cooperation with businesses to identify the skill sets needed. The labour market relevance of education and training systems should be enhanced accordingly.

Early school-leaving has increased by 3.3 pp. since 2005 to 14.9 %, leading to a high proportion of young people with very poor basic skills. This contributes to low productivity and high levels of income inequality. The UK has not set a national target for reducing the number of early school-leavers, but has taken steps to improve education and training systems.

Insufficient job creation, job cuts in the public sector, the gender gap, and a growing skills mismatch make progress towards the EU 2020 headline target for employment uncertain. Full-time pre-school childcare is still rare, insufficiently flexible and expensive, which is a constraint on single parents, females with caring responsibilities and second-earners entering the labour market. This holds true despite efforts to improve childcare for disadvantaged children and a high rate of participation in early education.

The UK has not made progress towards meeting the EU 2020 poverty and social inclusion target. Between 2007 and 2010, the number of people at risk of poverty or social exclusion increased from 13.5 million to 14.2 million. With the second highest rate of workless households in Europe, reaching 17.3 % in 2011, the UK faces another challenge in reducing poverty. In addition, children, particularly in lone parent households and large families, continue to face a much higher risk of poverty than the average for the total population. Low-skilled and inactive people moved off benefits onto the labour market without the required skill updates, disadvantaged individuals, especially those facing multiple disadvantages, lone parents with caring responsibilities, and certain ethnic minorities also face an increased risk of poverty. Pockets of poverty and evidence of social exclusion can be found in some remote rural and coastal areas in Scotland, Wales and Northern Ireland.

Stagnant investment in R&D&I and low availability of finance to the private sector (especially SMEs)

Investment in R&I has stagnated in recent years as the economy has focused on service industries (specifically the financial sector). This underinvestment threatens to undermine the UK’s competitiveness. In 2010, R&D investment in the UK amounted to 1.77 % of GDP, slightly below the EU average (and just over half way towards the EU 2020 target) and down on the figure for the previous year. Public spending accounted for around one third of the total. Private sector R&I stands at 61 %, but is largely dependent on a few sectors dominated by large companies (e.g. aerospace or pharmaceuticals). Therefore, the

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UK may not be fully benefiting from the potential of other high-growth sectors such as the maritime economy.

There is a need for more consistent sharing of the latest and best practice, to ensure that innovative approaches spread throughout the business environment. This could be done not only at national but also at transnational level. Translating knowledge into new market products and intellectual capital is another major challenge, and the UK must focus on commercialising research. The UK should also ensure that future skills needs will be met, with a steady supply of science and technology specialists.

SMEs, the major source for job creation, should be involved in the innovation process, leading to the internationalisation and exploitation of knowledge-intensive services. The UK should also ensure that the skills needs of the UK knowledge-based economy will be met.

Access to finance remains an issue for SMEs. Net lending to the corporate sector was negative in 2011, while survey evidence shows that a significant number of SMEs are credit-constrained. Additionally, access to non-bank lending remains largely restricted to bigger firms, and a substantial ongoing financing gap is anticipated over the next five years, especially for SMEs. The UK authorities have sought to remedy this situation with measures including loose and non-standard monetary policy, the use of government guarantees and the announcement of a government-sponsored business bank. The devolved administrations have also launched policies to support SMEs.

Inefficient use of resources

There are major challenges in the sustainable use of resources, in particular in relation to renewable energy, water, biodiversity, soil, air and marine resources. There are further needs in terms of the diversification of rural and fisheries-dependent areas.

Under Directive 2009/28/EC on the promotion of the use of energy from renewable sources, the UK has committed to reaching a target of 15 % of renewable energy sources in final energy consumption and a 10 % share of renewable energy in the transport sector by 2020. Currently, performance on energy from renewable sources is significantly short of the target. The UK ranks 25th out of 27 EU Member States regarding the share of renewable energy sources in final energy consumption.

In 2009, greenhouse gas emissions in sectors not covered by the European Emissions Trading Scheme (ETS) were 11.9 % lower than in 2005. The UK government aims to reduce these emissions by 16 % by 2020 compared to 2005 levels, but is expecting to reach this target only if existing and proposed measures are implemented in full.

Housing stock and public buildings in the UK offer a potential for additional savings through innovation in materials and construction methods.

The Scottish government has set more challenging targets: a reduction in GHG emissions by 80 % by 2050, with an interim target of 42 % by 2020. Ambitious renewable energy targets have also been set, along with plans to enable local and community ownership. In Wales, the government is committed to an annual reduction in greenhouse gas emissions of 3 % per year from 2011 in areas of devolved competence. By 2020, the target is an overall reduction of 40 % in all greenhouse emissions compared to 1990.

The preservation of natural resources, in particular the prevention of biodiversity loss, is a continuing challenge. Grasslands, wetlands and forest habitats are in a critical state in the UK. In the Scottish Highlands, conifer plantation forestry dominates, which causes

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problems for biodiversity, water and the landscape. Diversification is needed to improve biodiversity.

As regards water resources, only 37 % of surface water bodies in the UK currently have a good ecological status (the target for 2015 is 43 %). Over-abstraction is a problem in all the river basins, and certain agriculture practices contribute to the existing eutrophication of lakes and coastal waters. Soil quality status and soil erosion are also major challenges.

The fisheries sector still faces major challenges in achieving economic profitability and social and environmental sustainability, despite years of focusing on fleet renewal and concentration through temporary or permanent cessation of fishing activities. Most stocks are still overexploited and subject to wasteful practices (discards), so do not yield their full economic potential. There are imbalances between certain fleets and resources which the UK should evaluate and address, as well as issues of control and data collection. The aquaculture sector is not playing its part in meeting the continuing growing demand for seafood. Both sectors offer substantial potential for increased production and sustainable employment, provided that the economic and environmental sustainability challenges are addressed in the coming years.

The sustainable use of marine resources is important for the further development of the country’s blue economy. Marine offshore renewables in particular present the marine industry with a growth opportunity. RenewableUK recently reported that direct UK employment in the sector doubled to over 10 000 between 2007 and 2010. UK industries have been working on developing a strategy to ensure that the UK’s share of the global market continues to increase, focusing on sustainable offshore wind, wave and tidal energy generation.8 The demand for marine aggregate materials could significantly increase over the next five to ten years, offering a growth potential for the industry. In total, the area covered by all UK Marine Protected Areas is roughly 4.1 million hectares, or around 4.0 % of UK waters. Much of the sea is unmapped, so human activity may inadvertently damage irreplaceable resources.

Climate change and rising sea levels are likely to have a severe impact on the UK coast by 2080. The total rise in sea levels off the UK coast may exceed one metre and could potentially reach two metres. The sustainable management of coastal zones to preserve natural resources and ensure climate change resilience is a key challenge. The implementation of coastal protection and sea defence measures in the UK starts with the development of Shoreline Management Plans (SMPs). Here, consideration should be given to the benefits of working transnationally in cooperation with neighbouring countries, for example through the Maritime Strategy for the Atlantic Ocean area.

2. PRIORITIES FOR FUNDING

The CSF Funds will be important instruments in tackling the UK’s main development challenges and implementing the Europe 2020 strategy. Each Fund should give priority, where relevant, to policy areas addressed in the Country-Specific Recommendations and in the National Reform Programme, and should align its investments, as far as possible, with relevant sea-basin and macro-regional strategies at both programming and implementing level.

8 A Strategy for Growth of the UK Marine Industries. Marine Industries Leadership Council.

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For rural development, the priorities for funding will contribute to supporting the Common Agricultural Policy.

For coastal development, the priorities for funding will contribute to supporting the Common Fisheries Policies. Targeted funding should harness growth in the UK’s blue economy, in line with the UK Maritime Policy Statement.

To this end, intervention by the CSF Funds needs to concentrate on a limited number of priorities. Experience shows that thematic concentration can increase the effectiveness of public intervention by reaching a critical mass with a real impact on the socio-economic situation of a country and its regions, which can be further developed through cooperation with neighbours through common initiatives and the exchange of good practice. Prioritisation is of particular importance in times of fiscal consolidation.

Three complementary and mutually reinforcing funding priorities are proposed here in line with the country-specific challenges.9 They reflect the importance of funding needs and the potential contribution to growth and jobs. There is no ranking in their presentation, however.

Set out below are the priorities that the Commission would like to co-finance in the UK in the next programming period 2014-2020. Sufficient flexibility is built into the new programming architecture to respond to new challenges and unexpected events, which allows for reprogramming where justified.

2.1. Increasing labour market participation through improved labour market and education policies and reducing the risk of social exclusion

Increasing employability and reducing the risk of social exclusion should remain the core concern of the UK in utilising the CSF Funds. The Funds should contribute to job- creating growth, and their impact in terms of employment and combating poverty should be maximised. Investment in the thematic objectives for employment, education and poverty reduction should increase in line with the Country-Specific Recommendations. The relative share of CSF Funds' investments should thus be increased in comparison to the programming period 2007-2013.

2.1.1. Increasing labour market participation through improved labour market and education policies

In a context of worryingly rising youth unemployment in recent years, improving the employability of young people not in employment, education or training (NEETs) should remain the main focus in implementing the CSF Funds. Particular attention should be given to equipping NEETs with higher and more relevant skills and key competences to improve their employability.

The CSF Funds should focus on creating jobs by supporting employers and self-employment. Creating sufficient jobs and getting benefit recipients into stable jobs will be an important factor in achieving the European employment target. Particular CSF support is needed to improve labour market mobility in rural and coastal areas.

9 The thematic objectives in the proposed regulations and their links to the funding areas are outlined in

the Annex.

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Facilitating the labour market participation of women and lone parents should remain a priority for CSF investment to tackle the gender gap. The CSF Funds should support measures to reduce the main barriers to female labour market integration, particularly by facilitating access to childcare services.

The high number of low-skilled workers with very poor basic literacy and numeracy skills and the shortage of workers with the high-quality vocational and technical skills needed particularly in the manufacturing sector, where the UK’s performance is relatively weak, require more efficient and long-term vocational and educational policies. The UK should concentrate intervention by the CSF Funds on reducing the number of early school-leavers, enhancing access to lifelong learning, vocational training and apprenticeships, increasing the labour market relevance of education and training systems, and ensuring that they have a sufficient focus on advanced and higher-level skills.

In areas affected by the restructuring of the agricultural and fisheries sectors, the CSF Funds should support diversification into non-farming activities and marine and maritime activities other than fishing to create new sources of employment.

2.1.2. Reducing the risk of social exclusion

In order to reduce the risk of social exclusion, the CSF Funds should focus on enhancing access to affordable, sustainable and high-quality services, in particular childcare, and on integrating into the labour market people from workless households, low-skilled and inactive people moved off benefits onto the labour market, disadvantaged individuals, especially those facing multiple disadvantages, lone parents with caring responsibilities, and certain ethnic minorities. The active inclusion of lone parents with caring responsibilities and people from workless households with children will thus also contribute to reducing child poverty. Reducing poverty and social exclusion should be a particular priority in some remote rural and coastal areas in Scotland, Wales and Northern Ireland.

2.2. Promoting R&D investment and the competitiveness of the business sector

The CSF Funds should support business investment in R&D&I. The UK research base is a strength that should be used to create an innovation-friendly business environment, matching R&I business demand with supply. The translation of basic research into technological and applied research, pilot lines or early product validation should be supported, including in the agri-food sector and in the key enabling technologies. The CSF Funds should encourage more clustering and cooperation mechanisms between complementary sectors and between research and economic actors, both nationally and in a transnational context. The promotion of cooperation with a view to creating and developing Regional Maritime Clusters and the transfer of maritime knowledge and technology to industry have good potential as drivers of Blue Growth.

The Funds should also support innovative production and consumption patterns that minimise the negative impact on the environment, particularly among SMEs, including in the agriculture, fisheries and aquaculture sectors, and promote innovative ways of using ecosystem-based approaches to improve the competitiveness of SMEs.

Strengthened support should be provided for business development, business skills and entrepreneurship in the fisheries and agriculture sectors to develop new products and

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processes. This should include support for the adoption of improved technologies, processes for both the domestic and export markets, management and organisation systems in the supply chain, and the improvement of market organisation to enhance competitiveness and value-adding capability.

For the agricultural and fisheries sector, insufficiently consolidated supply structures should obtain proper support to create new producer groups and strengthen existing ones.

The CSF Funds should help to increase SME competitiveness and back entrepreneurship, in particular in export-related sectors, through the provision of funding, in particular non-bank finance (financial engineering) and business advisory services

2.3. Promoting an environmentally friendly and resource-efficient economy

Opportunities exist to use the CSF Funds to support action that will contribute to the 20/20/20 targets and, in turn, to sustainable economic growth. An estimated 125 700 jobs in renewable energy are predicted if the UK meets its Europe 2020 target.

The CSF Funds should support an increase in the use of all types of renewable energy (e.g. marine, wind and biomass energy), looking especially at the potential of innovative technologies, and should promote energy efficiency, particularly in buildings. The Funds should promote growth and sustainable living by investing in sustainable transport and connectivity in urban areas.

Investment is needed to reduce air pollutants, in particular from transport. The overall contribution of the transport sector to UK greenhouse gas emissions was 21 % in 2010, mainly from road transport.

The CSF Funds should support improvement of the management and environmental protection of natural resources in order to move towards a greener economy and meet the major environmental policy challenges, such as halting biodiversity loss by 2020 or achieving good status for all EU waters, including surface and groundwater, by 2015. Some major issues need to be tackled in the UK, such as water quality and efficiency, enhancement of biodiversity and habitats, and improvement of soil management and forestry.

Rural development funding will be central for the delivery of environmental and climate change policies and priorities for sustainable land use, as this creates jobs and conditions for economic growth.

The reform of the Common Fisheries Policy should bring about sustainable fishing for maritime and fisheries sectors and foster the economic development of fishing communities. To foster growth in fisheries-dependent regions, public funding should focus on rebuilding fisheries resources, generating further added value and diversifying fisheries activities into other sectors of the marine economy, including linkages facilitated by the Atlantic Strategy.

Much of the sea is unmapped, so human activity may inadvertently damage irreplaceable marine resources. Investment is needed to tap into the potential of the sea and coast in order to develop the blue economy and promote economic growth and sustainable jobs. The encouragement of Maritime Spatial Planning and Integrated Coastal Zone Management, aiming to curb demand and reduce the pressure on existing resources, should be a priority.

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CSF Funds should continue to focus on improving resource efficiency in the economy in both the national and broader transnational context with appropriate network, training and advisory programmes and services. These should target companies and branches of industry seeking to achieve further gains in energy efficiency, renewable energy use and emission reduction.

3. SUCCESS FACTORS FOR EFFECTIVE DELIVERY

The Common Provisions Regulation will set out ex-ante conditionalities for the effective and efficient use of EU Funds. They should be met by the time the programmes are approved. The Commission will assess the information provided by the UK in its assessment of the Partnership Agreement and programmes. The UK authorities need to take action to fulfil the conditions for successful spending in all these areas before the start of the next programming period.

A key ex-ante conditionality, in the light of the recommendations in this paper on research and innovation, is the production of a Smart Specialisation Strategy. This should set out the contribution of research and innovation to smart, sustainable, inclusive growth by highlighting the strengths and challenges and identifying appropriate policy interventions. Where the need for investment is identified in the Strategy, the CSF Funds will be an important tool. The UK may want to explore the possibilities of having strategies at devolved administration level to identify the different needs and opportunities across the UK, along with a national strategy that provides an overview and highlights actions to be taken at national level.

In fisheries, the ex-ante conditionalities include a multiannual national strategic plan on aquaculture, administrative capacity for data collection, and implementation of an EU control, inspection and enforcement system. The ex-ante conditionality for fisheries control is partially met in the UK. However, more efforts are needed for full compliance. With respect to data collection, the UK should pursue its efforts to improve data quality and availability so as to ensure a smooth shift from direct to shared management.

4. PRIORITIES FOR EUROPEAN TERRITORIAL COOPERATION

Effective solutions in many areas of development require a cooperative approach to challenges and opportunities, with Member States looking across borders to share experience, especially within cooperation frameworks such as sea-basin or other strategies relevant to their territories. The UK would benefit from broader cooperation through the ETC programmes supporting cooperative approaches developed in coherence with country-specific programmes in areas such as fostering innovation, eco-innovation projects, including comprehensive observation of the ocean environment, renewable energy, energy efficiency and environmental protection, and knowledge transfer and sharing of best practice between business, research and education.

The ETC programmes should mobilise co-investments to identify and realise the smart specialisation potential of cooperative cluster nodes in Europe and should also contribute to leveraging the economic potential of the maritime border areas by bringing about cooperation synergies.

The Atlantic Strategy covers the UK’s western seaboard. The transnational dimension of the Atlantic Strategy can bring new dynamism to the maritime economic sectors and can improve their economies of scale. An Action Plan is being drawn up to ensure that the

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objectives of stimulating growth and jobs in the marine and maritime economy, preserving the environmental status of the sea and connecting the regions are achieved. The Commission proposes to take on board the priorities resulting from the ongoing Atlantic Forum and will request the UK to outline its plans on how it intends to contribute to the Atlantic Maritime Strategy.

In the context of the peace process and the complex reconciliation issues in Northern Ireland and the border counties of Ireland, a potential PEACE programme should address the specific and complex challenges of social inclusion, youth work, education and capacity building for a shared future for the communities in the eligible areas.

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ANNEX

This annex contains the arrangements for effective programming and delivery, an assessment of funding needs in relation to thematic objectives, and an assessment of specific aspects of administrative capacities.

(a) Arrangements for effective programming and delivery

As far as experience in implementing the ESF is concerned, it is clear that strong policy coordination needs to be ensured to align investments with the Europe 2020 framework. The current implementation model provides efficient mechanisms to ensure this coordination and clear incentives for financial and physical performance. The flexible implementing structure of the current ESF programmes in England, Scotland, Wales and Northern Ireland has enabled them to respond effectively to policy priorities and changes at national, local and EU level, ensuring complementarity of provision, added value and exchange of good practice. Management information data and evidence from evaluation has demonstrated that national ESF programmes have been particularly successful at local level compared to previous regionalised management experiences. Despite the abolition of the regional tier of administration in England, the subsequent transfer of competences and responsibilities went smoothly and effectively.

Intermediate bodies in the ESF context have enabled the strategic involvement of local authorities in programme management with the autonomy to design their own local initiatives and the opportunity to influence national mainstreaming. London is a good example of an intermediate body with successful management experience, contributing to the success of the national programme in terms of participation but also with innovative provision supporting sustained job outcomes at local level.

The potential of territorial cooperation programmes has to be fully utilised, ensuring synergies between all the operational programmes and the wider macro-regional and sea-basin strategies.

Monitoring and evaluation must be aligned with the new regulatory framework (e.g. coordination mechanisms, databases). The UK should continue to work on identifying appropriate indicators and increasing data reliability. The UK is also encouraged to continue to develop its evaluation activity.

For the ESF, it is important to carefully review the target indicators for future investment priorities in order to set more realistic target indicators and to determine more carefully the level of national match funding. Beneficiaries could take advantage of the increased use of well-designed systems with simplified costs.

The structure of programmes should take into account the division of competences for relevant policies between regional and national levels. It should ensure overall coherence while respecting local conditions. Within a single operational programme for the EMFF, as stipulated by the EMFF Regulation, structuring the programme along regional lines to take account of the Member State’s administrative and political organisation may contribute to maximising synergies with other Funds and improving the efficiency of the delivery system. Support for the fish catching sector should contribute to an effective reduction in fishing capacity.

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Coordination, complementarity and synergy

Coordination between policies and complementarity of interventions are key conditions for successful implementation of the CSF Funds. The Funds also need to jointly address several thematic objectives. Government departments and managing authorities responsible for the implementation of the CSF Funds should work closely together on the preparation, implementation, monitoring and evaluation of the Partnership Agreement and programmes. It is essential that all Funds operate in an integrated way at delivery level.

Complementarities between the CSF Funds should be designed at policy level and put into practice through specific implementation solutions, including, where relevant, Integrated Territorial Investments and Community-Led Local Development. The UK is invited to present its approach and corresponding instruments for the coordinated use of the Funds in areas where complementarities are critical for efficient investment: education (especially the vocational training system) and entrepreneurship.

Where relevant, the CSF Funds should exploit the potential for synergies with other EU instruments, such as the Connecting Europe Facility, Horizon 2020, the European Institute of Innovation and Technology (EIT) and its Knowledge Innovation Communities (KICs), with a view to increasing innovation capacity through closer integration of the Knowledge Triangle, Marie Skáodowska-Curie Actions, the LIFE programme, Erasmus for All, the Creative Europe Programme, the Programme for Social Change and Innovation and the Asylum and Migration Fund.

Community-Led Local Development (CLLD) offers an integrated bottom-up approach to respond to complex territorial and local challenges through the involvement of local communities. The UK is invited to present its approach to CLLD across the CSF Funds, indicating the main challenges, objectives and priorities, the type of territories, the role of local action groups and different CSF Funds, and coordination mechanisms. The UK should also indicate how preparatory support will be made available for local actors.

(b) Assessment of funding needs in relation to thematic objectives

This section presents the Commission’s views on priorities for the CSF Funds in the UK. They have been developed on the basis of the Commission’s in-depth country analysis in the Staff Working Document accompanying the Country-Specific Recommendations as well as the eleven thematic objectives of the Common Provisions Regulation10 for the CSF Funds, adopted by the Commission on 6 October 2011. These thematic objectives translate the Europe 2020 strategy into operational objectives to be supported by the CSF Funds.

The eleven thematic objectives are common to the cohesion, rural development and maritime and fisheries policies. They ensure that interventions under these policies are aligned towards achievement of the Europe 2020 objectives. They provide a menu for possible funding priorities for the whole of the EU. Depending on each Member State’s specific situation, a more focused selection is then made in agreement with the national authorities. The challenges and funding areas for the UK correspond to the following thematic objectives:

10 COM(2011) 615 final/2.

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Funding priorities Related thematic objectives Increasing labour market participation through improved labour market and education policies Reducing the risk of social exclusion

Promoting employment and supporting labour mobility Promoting social inclusion and combating poverty Investing in education, skills and lifelong learning

Promoting R&D investment and the competitiveness of the business sector

Strengthening research, technological development and innovation Enhancing the competitiveness of small and medium-sized enterprises, the agricultural sector and the fisheries and aquaculture sector

Promoting an environmentally friendly and resource-efficient economy

Supporting the shift towards a low-carbon economy in all sectors Protecting the environment and promoting resource efficiency

FUNDING PRIORITY: INCREASE LABOUR MARKET PARTICIPATION THROUGH IMPROVED LABOUR MARKET POLICIES AND REDUCING THE RISK OF SOCIAL EXCLUSION

The objectives of the funding priorities ‘Increasing labour market participation through improved labour market and education policies’ and ‘Reducing the risk of social exclusion’ will be achieved primarily through the thematic objectives ‘Promoting employment and supporting labour mobility’, ‘Investing in education, skills and lifelong learning’ and ‘Promoting social inclusion and combating poverty’. Thematic objective: Promoting employment and supporting labour mobility

Europe 2020 headline target Current situation National 2020 target in the NRP

To raise to 75 % the employment rate for women and men aged 20-64, including through greater participation of young people, older workers and low-skilled workers and better integration of legal migrants


Country-Specific Recommendation: Continue to improve the employability of young people, in particular those not in education, employment or training, including by using the Youth Contract. Ensure that apprenticeship schemes are taken up by more young people, have a sufficient focus on advanced and higher-level skills, and involve more small and medium-sized businesses. Take measures to reduce the high proportion of young people aged 18-24 with very poor basic skills. For this thematic objective, the funding priority translates into the following priorities and specific objectives reflecting country-specific challenges to be addressed by the CSF Funds:

(1) Sustainable integration of young unemployed people, especially of young people not in employment, education or training (NEETs) into the labour market by:

x Incentivising SMEs to take up more young apprentices. x Creating opportunities for business starts-ups for young people.

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x Supporting the introduction of the youth guarantee to offer support to young people not in employment, education or training within 4 months of leaving school. Ensuring access to publicly funded training for young people who have left school without basic skills in literacy and numeracy.

(2) Access to employment for job-seekers and economically inactive people, including local employment initiatives and support for labour mobility by:

x Supporting the employability of unemployed and economically inactive people. x Increasing the employability of inactive and unemployed individuals facing

multiple disadvantages, including young unemployed, as well as families with multiple problems.

x Supporting the employability of the long term-unemployed. x Increasing employability and employment in rural and coastal areas.

(3) Equality between men and women and better balance of work and private life through:

x Reducing gender barriers to female participation in the labour market.

(4) Increased employability and employment in rural and coastal areas.

In order to ensure investment by the CSF Funds under this thematic objective, the relevant ex-ante conditionalities need to be met. In addition, the following general considerations would improve governance and delivery:

x Action by all Funds should have a clear focus on increasing the employment rate, particularly for the unemployed and economically inactive, young people, women, the unemployed facing multiple disadvantages, families with multiple problems and the long-term unemployed.

x Access to publicly funded training for young people who leave school without basic skills in literacy and numeracy should be ensured.

x Opportunities should be explored in order to coordinate the Funds, to support businesses and to promote inclusive development in all areas.

x Priorities should be clearly defined to ensure the Funds add value.

x Synergies should be sought with other instruments in line with the Youth on the Move flagship initiative.

Actions under this thematic objective may contribute, if relevant, to related interventions under the thematic objectives aimed at strengthening research, technological development and innovation, enhancing the competitiveness of SMEs, supporting the shift to a low-carbon economy, promoting social inclusion and combating poverty, and investing in education, skills and lifelong learning.11

11 Thematic objectives 1.3, 4, 9 and 10 according to the draft Common Provisions Regulation

(COM(2011) 615 final).

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Thematic objective: Promoting social inclusion and combating poverty


Promoting social inclusion, in particular through poverty reduction, by lifting at least 20 million people out of the risk of poverty and exclusion.

Between 2007 and 2010, the number of

people at risk of poverty or social

exclusion increased from 13.5 m to 14.2 m

No target in NRP

Country-Specific Recommendation: Step up measures to facilitate the labour market integration of people from jobless households. Ensure that planned welfare reforms do not translate into increased child poverty. Fully implement measures to facilitate access to childcare services.

For this thematic objective, the funding priority translates into the following priorities and specific objectives reflecting country-specific challenges to be addressed by the CSF Funds:

(1) Active inclusion:

x Reducing the number of people at risk of poverty and exclusion by supporting the employability of disadvantaged individuals and reinforcing measures to help people at risk to return to employment.

x Increasing the employability of inactive and unemployed individuals facing multiple disadvantages.

x Supporting the training of low-skilled workers, including those receiving Universal Credit benefits, in order to increase their chances of better paid work and to reduce poverty.

x Facilitating access to childcare services.

In order to ensure investment by the CSF Funds under this thematic objective, the relevant ex-ante conditionalities need to be met. In addition, the following general considerations would improve governance and delivery:

x The Commission expects the UK to consider using the CSF Funds to support other complementary policies to reduce the risk of relative poverty among groups for whom labour market inclusion is not an effective or realistic option.

Actions under this thematic objective should be coordinated with interventions under the thematic objectives aimed at promoting employment and supporting labour mobility and investing in education, skills and lifelong learning.12

Thematic objective: Investing in education, skills and lifelong learning


The share of early school-leavers should be under 10 %, and at least 40 % of 30-34 years old should have completed tertiary or equivalent education.

15 % in 2011 No target in NRP

12 Thematic objectives 8 and 10 according to the draft Common Provisions Regulation (COM(2011) 615

final).

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Country-Specific Recommendation: Continue to improve the employability of young people, in particular those not in education, employment or training, including by using the Youth Contract. Ensure that apprenticeship schemes are taken up by more young people, have a sufficient focus on advanced and higher-level skills, and involve more small and medium-sized businesses. Take measures to reduce the high proportion of young people aged 18-24 with very poor basic skills.


(1) Enhancing access to lifelong learning, upgrading the skills and competences of the workforce and increasing the labour market relevance of education and training systems by:

x Increasing the number of young unemployed people attending apprenticeships and improving the quality of vocational training.

x Increasing the provision of advanced and higher-level skills and involving more small and medium-sized businesses.

x Encouraging the adaptation of workers, enterprises and entrepreneurs to change, including changes arising from economic globalisation, technological change, sectoral adaptation and an ageing workforce, and addressing skills needs and labour shortages in some sectors and regions.

x Improving the access of people with very poor basic literacy and numeracy skills to vocational training.

x Encouraging the building of links between education and economic clusters. x Supporting vocational training in the agricultural, fisheries and forestry

sectors. (2) Supporting vocational training in the agricultural, fisheries and forestry sectors.

(3) Reducing early school-leaving and promoting equal access to good-quality early-childhood, primary and secondary education by:

x Reducing the high proportion of early school-leavers by investing in targeted and coordinated measures to prevent drop-out and to reintegrate early school-leavers into education and training.

To ensure investment by the CSF Funds under this thematic objective, the relevant ex-ante conditionalities need to be met. In addition, the following general considerations would improve governance and delivery:

x Opportunities may be explored to coordinate the Funds, for example in supporting business involvement in vocational education and training (VET).

Actions under this thematic objective should be coordinated with interventions under the thematic objectives aimed at strengthening research, technological development and innovation, enhancing the competitiveness of SMEs, supporting the shift to a low-carbon economy, promoting employment and supporting labour mobility, and supporting social inclusion and combating poverty.13 Coordination with actions under Youth on the Move and An Agenda for New Skills and Jobs should be further explored.

13 Thematic objectives 1.3, 4, 8 and 9 according to the draft Common Provisions Regulation

(COM(2011) 615 final).

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FUNDING PRIORITY: PROMOTE R&D INVESTMENT AND THE COMPETITIVENESS OF THE BUSINESS SECTOR

The objectives of this funding priority will be achieved primarily through the thematic objectives ‘Strengthening research, technological development and innovation’ and ‘Enhancing the competitiveness of SMEs, the agricultural sector and the fisheries and aquaculture sector ‘.

Thematic objective: Strengthening research, technological development and innovation

Europe 2020 headline target Current situation

National 2020 target in the NRP

Improving the conditions for research and development, in particular with the aim of increasing combined public and private investment in this sector to 3 % of GDP



(1) Supporting business investment in R&D&I and enhancing the effective commercialisation of basic research and cooperation between research and economic actors through:

x Innovation in enterprises: this includes the dissemination and adoption of new technologies, in particular key enabling technologies, through cooperation with actors, nationally and across borders, in the fields of research and education, technology transfer, applied research, technology development and demonstration facilities, in order to help companies develop more innovative products, processes, marketing and services and diversify the national/regional economy through new high-growth activities, including knowledge-intensive services.

x Continued tailor-made offer of financial instruments for innovative, high-growth companies, including loans and guarantees, equity funding for early-stage and growth investments, bridge financing and incentives for venture capital development.

x Support for product and service innovations identified under the European Innovation Partnerships (EIP) and Knowledge Innovation Centres (KICs) linked to the European Institute of Technology (EIT), in connection with the related Colocation Centre (CC UK).

x Support Joint Programming Initiatives as well as the participation in or capacity building for public-public partnerships under Horizon 2020 (ERA-NETs and Article 185 initiatives) to which the UK is committed to participate.

x Promotion and scaling up of social innovations with incubators, platforms and networks. Continued use of public procurement to speed up innovation. Mobilising co-investments in smart cluster nodes in specific value chains at European level.

x Support for the development of ‘research to market’ — improved commercialisation of research in all sectors, e.g. through support for clusters

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and cooperative partnerships between research, education and innovation actors or business advisory services, both nationally and across borders.

x Establish regional or national partner facilities for ESFRI Roadmap Projects and other equivalent world class research infrastructures.

x Align the research and innovation strategy on energy with the Strategic Energy Technology Plan (SET Plan).

x Harnessing of the untapped potential of Europe’s oceans, seas and coasts, where innovation can be stimulated by better knowledge of the sea as well as targeted research in underperforming or emerging industries such as ocean energy, marine biotechnology, aquaculture or seabed mining. Strengthened support for business development, matching skills to business demand and entrepreneurship.

(2) Supporting innovative production and consumption patterns that minimise the negative impact on the environment, through:

x Support for innovative production and consumption patterns in SMEs and in the agriculture, fisheries and aquaculture sectors to minimise the negative impacts on the environment. Promotion of innovative ways to use ecosystem-based approaches to improve the competitiveness of SMEs and these sectors.

Actions under this thematic objective should be implemented in line with the priorities identified in the ERA Communication adopted by the Commission on 17 July 201214. They may contribute, if relevant, to related interventions under the thematic objectives aimed at enhancing the competitiveness of SMEs, protecting the environment and promoting resource efficiency, and investing in education, skills and lifelong learning15

Thematic objective: Enhancing the competitiveness of SMEs, the agricultural sector and the fisheries and aquaculture sector

Country-Specific Recommendation: Improve the availability of bank and non-bank financing to the private sector and in particular to SMEs


(1) Increasing SME competitiveness and backing entrepreneurship in particular in export-related sectors by providing funding, in particular non-bank finance and business advisory services, for:

x Support for business development, business skills and entrepreneurship, in particular through access to finance (financial engineering), ICT take-up or business advisory services to encourage the adoption of innovation in products, processes (both for domestic and export markets), eco-innovations and resource efficiency, technologies, and management and organisation

14 COM(2012) 392 final

15 Thematic objectives 3, 6 and 10 according to the draft Common Provisions Regulation (COM(2011) 615 final).

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systems in the supply chain in all sectors of industry including agri-food, seafood and the bio-economy.

x Investment in the commercial exploitation of new ideas and research results and the creation of more knowledge-intensive businesses through interventions tailored to the needs of SMEs at their various stages of development and along the innovation value chain.

x Encouragement of entrepreneurship among under-represented groups, including women and young people.

x Addressing of specific issues around entrepreneurship in the agriculture sector, including the restructuring of farms facing major structural problems, the integration of primary producers into the food chain through support for quality schemes (including organic), horizontal and vertical cooperation, new marketing and promotion in local markets, farm risk management, and diversification of the agricultural sector.

x Improvements to market organisation in the fisheries sector to enhance competitiveness and value-adding capability, together with developing area-based strategic management plans, including for fisheries and aquaculture as well as other activities, and improving clusters and cooperation mechanisms between complementary sectors, particularly by increasing exchanges between R&I, academia and SMEs.

Actions under this thematic objective may contribute, if relevant, to related interventions under the thematic objectives aimed at strengthening research, technological development and innovation, protecting the environment and promoting resource efficiency, and investing in education, skills and lifelong learning.16

FUNDING PRIORITY: PROMOTE AN ENVIRONMENTALLY FRIENDLY AND RESOURCE-EFFICIENT ECONOMY

The objectives of this funding priority will be achieved primarily through the thematic objectives ‘ Supporting the shift towards a low-carbon economy in all sectors’ and ‘Protecting the environment and promoting resource efficiency’.

Thematic objective: Supporting the shift towards a low-carbon economy in all sectors


Greenhouse gas emissions 20 % lower than 1990 -19.1 % -34 %Greenhouse gas emissions in sectors not covered by ETS 10 % lower than in 2005

-11.9 % -16 %

20 % of energy from renewables 2.9 % 15 %20 % increase in energy efficiency (reduction in primary energy consumption by 2020 in Mtoe)17

./. No target in NRP

16 Thematic objectives 1, 6 and 10 according to the draft Common Provisions Regulation (COM(2011)

615 final).

17 Member States will define/revise their targets in line with the newly agreed methodology on target setting laid out in Article 3(3) of the Energy Efficiency Directive. This will be available only by 30 April 2013.

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(1) Promoting growth and sustainable living by investing in urban transport and connectivity, through:

x Integrated, sustainable and accessible urban mobility concepts leading to reduced GHG emissions, in particular through sustainable urban transport plans, including facilitating the use of public transport. Intelligent urban transport should cover the functional urban areas, in order to improve urban-rural linkages and provide access to jobs and services from rural areas too.

x Development of integrated multimodal transport hubs and motorways of the seas throughout the Atlantic area, in line with EU TEN-T guidelines and objectives, with a view to e.g. de-congesting road traffic (where applicable), increasing transport efficiency/timing and increasing connectivity between distant coastal areas.

Actions under this thematic objective may contribute, if relevant, to related interventions under the thematic objectives aimed at strengthening research, technological development and innovation, enhancing the competitiveness of SMEs and investing in education, skills and lifelong learning18

Thematic objective: Protecting the environment and promoting resource efficiency

For this thematic objective, the funding priority translates into the following priorities and specific objectives reflecting country specific challenges to be addressed by the CSF Funds:

(1) Supporting energy efficiency and the use of renewable energy, through:

x Encouragement of energy efficiency measures and renewable energy use in SMEs in all sectors. Provision of the necessary skills training.

x Encouraging private sector investment in renewable energy and boosting the use of innovative renewable energy technologies, including the establishment of grid connections (smart grids and low voltage) and port facilities for offshore and ocean energy.

x Facilitating the supply and use of renewable energy sources as well as by-products, waste, residues and other non-food raw material to promote the bio-economy through investment, for example on-farm, in new forestry technologies and more generally in infrastructure in rural areas. Support for marine-based renewable energy production, including tidal and wave energy.

x Enhancement of carbon sequestration and emission reduction in agriculture and forestry by stimulating forest planting and maintenance, promoting the climate-friendly management of forests, maintaining peat lands, and reducing nitrous oxide and methane emissions in the animal and dairy sectors.

x Integration of low-carbon strategies and sustainable energy action plans for urban areas, including public lighting systems and smart grids.

18 Thematic objectives 1, 3 and 10 according to the draft Common Provisions Regulation (COM(2011)

615 final).

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(2) Improving the management and environmental protection of natural resources, through: x Contributing to reducing transport-related air pollution by supporting cleaner

transport, improved public transport infrastructure and alternative forms of transport.

x Increased efficiency in the use of water by agriculture, particularly in areas impacted by drought.

x Improvement of water and soil quality and protection of soil from erosion, compaction and loss of organic matter.

x Support for sustainable integrated urban development, including through sustainable urban drainage, soil desealing measures or the rehabilitation of contaminated sites.

x Preservation and enhancement of biodiversity and the state of European landscapes through more targeted agri-environment schemes and the protection of Natura 2000 and high Nature Value Farming areas and promotion of collective action to deliver environmental public goods and organic farming.

x Examination of incentives to stimulate companies, including SMEs, to measure and improve their resource efficiency and promote the sustainable use of raw materials.

x Support for the transition to environmentally sustainable fisheries (through measures to achieve Maximum Sustainable Yield and support for the discard ban, improved data collection for resource conservation purposes, and strengthened control of the implementation of CFP rules) as well as eco-innovation (innovation to reduce environmental impacts) and aquaculture with a high level of environmental protection. The UK also needs to evaluate and identify any remaining overcapacity in its fleets in order to phase it out.

x Support for the use of integrated maritime policy tools for sustainable growth and competitiveness as well as the sustainable exploration and exploitation of seabed resources.19

x Support for the fisheries and aquaculture sector to respond to increased consumer awareness, expectations and interest in products from sustainable sources that are produced in environmentally friendly ways.

x Support for the surveying of seabed habitats. x Development and promotion of employment in eco-activities and training

and awareness in different environmental professions and networks, including in nature protection.

Actions under this thematic objective may contribute, if relevant, to related interventions under the thematic objectives aimed at strengthening research, technological development and innovation, enhancing the competitiveness of SMEs, supporting the shift to a low-carbon economy, and protecting the environment and promoting resource efficiency.20

19 Such as maritime knowledge, Maritime Spatial Planning, Integrated Coastal Zone Management and

integrated maritime surveillance.

20 Thematic objectives 1, 3, 4 and 6 according to the draft Common Provisions Regulation (COM(2011) 615 final).

ADMINISTRATIVE ARRANGEMENTS

The administrative arrangements in the UK are generally sound. Efforts should continue to fine-tune them and further reduce the administrative burden for beneficiaries to ensure effective access to interventions. The evaluation of performance in the ESF Operational Programmes in the 2007-2013 programming period indicates that current administrative arrangements and programme design lead to efficient delivery.

Both England (following abolition of the Regional Development agencies, which acted as match funding providers and intermediate bodies in the 2007-2013 period) and Scotland (integration of intermediate body staff and activities within the Scottish Government) have seen significant changes in the way programmes were implemented half way through the 2007-2013 programming period. It is expected that most of the current structures will be used in the 2014-2020 period.

Wales and Scotland are exploring the possibility of having seamless arrangements in the form of project sponsors, with their respective administrations providing the ‘back office’ support to make this possible. Common functions such as evaluation, planning and communications would be integrated. Wales has also concentrated CSF funding under the aegis of one Minister, thus providing the political impetus for this vision.

In terms of management systems, both Wales (PPMIS system) and Scotland (€urosys) have good ICT systems. The Integrated National ESF System for England and Gibraltar (INES) also works well. In the case of the PPMIS system, this enables beneficiaries to input project data (indicators, expenditure) directly via a web-based portal, which is very much in line with the Commission’s eCohesion proposals. The Commission considers that these systems provide a good basis for future arrangements.

The UK should continue to work on identifying appropriate indicators and increasing data reliability. The UK’s ESF managing authorities must agree on a common minimum set of jointly defined indicators for all programmes, allowing the aggregation and comparison of output and result data at programme, national and Member State level. The UK is also encouraged to continue to develop its evaluation activity. Monitoring and evaluation must be aligned with the new regulatory framework (e.g. coordination mechanisms, databases). In the area of rural development, the UK should ensure an effective and efficient control environment and should be able to confirm the operability of its control systems.

For the ESF, it is important to carefully review the target indicators for future investment priorities in order to set more realistic target indicators as well as to determine more carefully the level of national match funding. Beneficiaries could take advantage of the increased use of well-designed systems with simplified costs.

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