Business 2000

National Development Plan

EIGHTH edition

EU STRUCTURAL AND COHESION FUNDS

Childcare Centre Drumshambo Co. Leitrim

EUROPEAN REGIONAL POLICY - BOOSTING ECONOMIC DEVELOPMENT

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

The Four Funds

The EU Structural Funds consist of four individual funds.The funds work together by supporting different aspects of regional development. 1. European Regional Development Fund (ERDF) - Promotes economic and social cohesion within the EU by reducing imbalance between regions or social groups. In Ireland, the ERDF provides support for road development, public transport projects such as LUAS and Quality Bus Corridors (QBCs), micro-enterprise development through the County Enterprise Boards,Tourism Projects, and waste management. 2. European Social Fund - Aims to help, prevent, and combat unemployment; to equip Europe's workforce to face new challenges; and to keep people in contact with the labour market. In Ireland, the ESF supports the National Employment Service (FS), School Completion Initiatives, Early School Leavers,Third Level Access Initiatives, Skills Training and Traineeships, In Company Training and Life-long Learning Initiatives, Promotion and Monitoring of Equal Opportunities, and Childcare Training and Staffing . 3. European Agriculture Guidance and Guarantee Fund Contributes to the structural reform of the agricultural sector and the development of rural areas. In Ireland, the EAGGF supports rural development through the LEADER programme. Other initiatives supported include Farm Waste Management, Improvement of Dairy Hygiene Standards and Forestry. 4. Financial Instrument for Fisheries Guidance - Supports the structural reform of the fisheries sector. In Ireland, the fund supports development of fisheries harbours, aquaculture development, measures to adjust the fishing fleet, renewal and modernization of the whitefish fleet and smaller scale inshore vessels, support for conservation and stock management, fish processing, and training.

THE EUROPEAN UNION

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

THE COMMUNITY BUDGET

The EU has to plan its work well in advance and ensure that it has enough money to pay for its objectives. The main EU institutions (Parliament, Council, and Commission) agree in advance on the priorities for the next few years and develop a spending plan or financial perspective. A financial perspective states the maximum amount the EU can spend, what it can spend it on, and where the money will come from. The current financial perspective runs from 2000-2006. Over the course of time, the EU budget has changed to reflect different priorities within the EU. The EU budget is a mix of its own resources and direct contributions by Member States.The EUs own resources are revenues from levies on agricultural imports, customs duties on other imports, and a portion of value-added tax (VAT) income. In 2003, the EUs own resources accounted for one quarter of the revenue of the overall EU budget. Contributions from Member States account for three quarters of the EUs revenue. Member States contribute a percentage of gross national income. As this is a measure of national wealth, the formula ensures that each country contributes according to its means.The money is then spent where it is needed most. EU money is used to support a whole range of EU policies.The largest portion of the budget is allocated to agriculture, which now accounts for 45% of EU spending. Regional Policy which is implemented through investment by the Structural and Cohesion Funds represents the second largest budget item, taking approximately one third of total expenditure.The remaining EU money is spread across a wide range of policies including helping the Third World, emergency aid assistance, educational and training programmes, research and development, health and consumer protection, to mention a few.

Since 2000, Regional Policy has provided considerable assistance to the economic development of the countries applying for accession to the EU. On 1 May 2004, 10 new Member States joined the EU.This major event was a historic opportunity for Europe and a challenge for Regional Policy. On that day, the range of disparities within the EU was enlarged. It is necessary for the EU to respond to the enormous needs of the new Member States and also to the difficulties that remain in the rest of the Union. The monies used for implementing Regional Policy and boosting economic development are the Structural and Cohesion Funds.

THREE OBJECTIVES
Regions within the EU are classified for financial support depending on the economic difficulties they encounter.There are three types of regions (Objectives) that receive financial support from Structural Funds. The most significant Objective (in terms of resources allocated) is Objective 1. Objective 1 Helping regions whose development is lagging behind to catch up, i.e., providing them with the basic infrastructure or encouraging investments in business economic activity. Some 50 regions, representing 22% of the EUs population are included.

Cavan Innovation & Technology Centre

EU Structural Funds
The Structural Funds were created to help those regions within the EU whose development is lagging behind. The Structural Funds aim to:

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develop infrastructure, such as transport and energy; aid regions affected by industrial decline; support the development of rural areas; extend telecommunications services; provide training for workers; combat long-term unemployment; disseminate the tools and know-how of the information society; and promote research and development.

Business 2000
EIGHTH edition

NDP - EU Structural and Cohesion Funds

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Objective 2 Supporting economic and social conversion of industrial, rural, urban, or fisheries-dependent areas facing structural difficulties. Approximately 18% of the EUs population live in these areas. Objective 3 Modernising systems for training and promoting employment. Objective 3 covers the whole EU, except for the 50 Objective 1 regions where funding for training and employment are included in the funds already allocated.

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

For example, the National Roads Authority is responsible for expenditure under the National Roads measure, FS has responsibility for social economy projects, and the Department of Environment & Local Government for water services. Therefore, to apply for grants in a relevant sector, an individual, company, or organisation should contact the appropriate Government Department or State Agency.

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

EU funding is not provided to allow countries make savings in their own national budgets. Member States must follow guidelines that apply throughout the EU. In order to receive Structural Funds, Member States must submit a plan to the European Commission outlining: The social and economic situation in the region The priorities and strategy for use of Structural Funds The financial resources of the applicant Member State. The submitted plan forms the basis of negotiations between the Member States and the European Commission and results in an agreement known as a Community Support Framework document or a Single Programming Document. These documents set out the actions, objectives, targets, anticipated financial resources, monitoring, evaluation, and control systems to be set in place to manage the EU funds. There have been three programming periods for EU Structural Funds 1989-1993, 1994-1999, and the current period 2000-2006. The next period will run from 2007-2013.

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

Glossary
Gross National Income: The total value of all goods and services produced within a nation over a specified period of time, representing the sum of wages, profits, rents, interest, and pension payments to residents of the nation.

IRELAND & THE COHESION FUND TASKS & ACTIVITIES

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

REGIONAL & COHESION POLICY IN IRELAND

Since joining the EU in 1973, Ireland has received approximately EU Structural and Cohesion Funds (to end 2003). 17bn in

IMPLEMENTATION OF THE NATIONAL DEVELOPMENT PLAN IN IRELAND

The NDP is divided into separate programmes; two regional, three InterRegional (or national) and a separate PEACE programme which operates in the Border Counties and Northern Ireland. Regional Programmes Border Midland and Western (BMW) Southern and Eastern (S&E) Inter-Regional (National Programmes) Employment and Human Resources Development Productive Sector Economic & Social Infrastructure PEACE II supports the Peace Process in Northern Ireland and the border counties of Donegal, Monaghan, Cavan, Louth, Sligo, and Leitrim. Each programme is divided into sub-programmes and measures which outline the specific funding initiatives. While overall responsibility for the implementation of the NDP rests with the Department of Finance, each programme is administered by a Managing Authority. The Managing Authority delegates implementation to an Implementing Body in most cases a Government Department or State Agency.

Like other Member States, the Irish Government submitted plans outlining investment priorities for each funding period. Irelands plan is known as a National Development Plan (NDP). The current NDP is Irelands third investment plan.Total investment under the two previous plans amounted to approximately 30bn, with the Structural Funds and Cohesion Funds contributing 11.3bn and the balance sourced from the Irish Exchequer.This financial support has enabled Ireland to proceed with its planned upgrade of the roads network, education and training, and the support for industry. Under the current NDP, Ireland will receive 3.35bn from the Structural Funds. The Cohesion Fund contributed 586m to Ireland during the period 2000-2003.The current NDP differs from previous plans in that it is not designed just to obtain EU funds. The NDP involves planned investment of 57bn with the majority of the funding coming from the Exchequer.The NDP uses the EU approach to planned investment and has applied it to a wide range of Government expenditure.

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

National Development Plan

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EIGHth edition

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ALLOCATION OF STRUCTURAL FUNDS

THE COHESION FUND