Brussels blog

European structural funds investigation

UPDATE: see below for later reaction from the  European Commission.

The Brussels press corps got a change from Ireland bail-outs on Tuesday, when the European Commission decided to make structural funds the topic of the day.

Pia Ahrenkilde-Hansen, Commission spokeswoman, spent the first 15 minutes of the daily midday briefing vocally defending cohesion funds, in direct response to day 1 of the FT’s expose.

“It is simply not true that cohesion funding lies idle under red tape,” she said, reprising our front-page headline. Her argument, which I expect will find its way onto the FT’s letters page, is that the money isn’t sitting on EU bank accounts – but rather has yet to be called up from member states.

She continued by saying that low take-up was not an issue. “But we are addressing it,” she added.

More significantly, the Commission has geared up a full-blown public relations campaign to counter the FT’s story – now featuring on Twitter.

It gave journalists a dossier – much of it recycled – with details of success stories in their own countries, hoping the good news would drown out the programmes’ lacunae.

Even after discussing the matter for half an hour on the record, the Commission continued with a full-blown background briefing with senior technical experts. (The FT was there, but cannot report on its contents, obviously.)

Unlike most press events, this wasn’t announced yesterday, so it figures that the Commission hastily arranged it this morning.

There’s also evidence of something rather extraordinary behind the scenes.

According to several sources we had spoken to over the past months, the Commission on Tuesday has been sending e-mails to people involved with the funds – national administrators, consultants and so on.

“I have received an email directly from the European Commission asking all structural funds representatives to react quickly to your edition, by mobilising journalists at national and regional levels, asking them to publish positive [articles] on the issue,” says one.

It will be interesting to see if there is a spurt of good news EU funding stories in European media.

UPDATE: Laszlo Andor and Johannes Hahn were both quizzed by European Parliamentarians this afternoon on structural funds. A couple of MEPs brought up the FT stories past and present, notably on the issue of those companies that use EU money to relocate to other countries within the EU. Expect more on that topic in days to come.

Laszlo Andor welcomed the attention given to structural funds, with reservations. “Some of the conclusions [drawn by the FT] are quite misleading, but we have to look at the issues,” he said.

UPDATE 2: Just before 6pm, the two Commissioners sent out a statement to the entire Brussels press corps attempting to set the record straight on the FT’s story.

Their statement looks more to be a general declaration on how effective EU funds are, rather than anything specific with the FT’s take. You have all the links in the text above to the original sources, as well as a video interview of Johannes Hahn.

Because their statement doesn’t seem to be available on the website, we’ve printed it below.

Statement by Johannes Hahn, Commissioner for Regional Policy, speaking to media today on Cohesion Policy before the hearing by the European Parliament’s Budget Control Committee

“The funds for cohesion policy are not lying idle under red tape. The EU Member States, regions and cities are working on a daily basis with these funds. In many regions, EU Cohesion funding is the most important steady stream of investment available to create economic growth and jobs.

Cohesion policy brings significant benefits to the poorer regions of the EU, but is also benefiting the whole of Europe. There is a clear link between cohesion policy and the Single Market. Cohesion policy supports regions that are lagging behind to participate in the internal market. GDP in the EU was 0.7% higher in 2009 thanks to cohesion policy.

It is normal that the take-up rate of funds is slower at the beginning of a programming period than at the end. Until the end of 2009, the Member States were spending funds from the previous period or from national or EU recovery plans, instead of cohesion policy. Because very often, funding from recovery plans has been available only during a short period.

Only a small part of cohesion funding is affected by errors. We succeeded in bringing down the error rate by more than half in 2009 to slightly above 5% and will certainly continue our efforts in this direction. This is also what we will address with the Parliament’s Budgetary Committee. Suspected fraud accounts for only a very small part of the error rate.

Together with my colleague László Andor, I have presented on 9 November the blueprint for a reform of cohesion policy that will further increase the effectiveness of the policy: more result-orientation, more concentration on priority areas, simpler rules. This will also address the issues raised in today’s media reports.”

Statement by László Andor, EU Commissioner for Employment, Social Affairs and Inclusion, on Cohesion Policy

On speaking to journalists on his way to the European Parliament Commissioner Andor said: “I appreciate the media interest today in cohesion policy. I would like to stress that we have sound evidence that cohesion brings daily benefits to regions and, above all, people. EU funding is working for jobs and growth. Cash is certainly not lying idle – on the contrary, EU funds act as a catalyst, often leveraging public and private funds”.

He added: “In 2009, 11 million people received training through the European Social Fund (ESF) and each year two million people find a job thanks to ESF support. We’ve also seen that in 2007-2008, over then thousand small businesses receiving ESF funds were set up.”

Stressing the importance of the ESF for the future, Mr Andor underlined: “Today, all countries are faced with enormous economic and social challenges. In the aftermath of the economic and financial crisis the European Social Fund (ESF) is more important than ever before. It is key to recovery, helping people train, retrain and improve their skills and chances to find a job. That is also why I call on Member States to continue to step up their spending and use EU funds fast and effectively for high quality programmes”.

Together with Mr Hahn, Commissioner Andor invited all interested parties to contribute to the ongoing public debate on the future of cohesion policy as launched with the 5th cohesion report. He said: “We can certainly always improve and do more and better with EU funding. For the future, I believe we can bring the European Social Fund closer in line with our Europe 2020 objectives. We also need a better focus on performance and results as well as efficiency of the Fund and this is something we are working on actively with all our partners”.