Why we need the urban dimension in future EU Cohesion Policy

By Jonas Scholze, on April 19th, 2017

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By Jonas Scholze, German Association for Housing, Urban and Spatial Development, National URBACT Point for Germany and Austria

The urban dimension in the European Union’s Structural Funds policy became an intrinsic part of EU Cohesion Policy over the past two decades. Today, approximately 15bn euros are reserved within the EU Structural Funds for integrated and sustainable development projects until 2020. The projects cover a multitude of topics such as social inclusion, concepts for energy efficient neighbourhoods or the creation of local clusters for the creative industry sector. Local projects on social infrastructures, urban mobility, or the renovation of buildings and public spaces have the advantage of making the EU more ‘visible’ for citizens. They establish a direct link with them – in contrast to many other EU policies which often remain abstract for EU-citizens.

Several member states are still busy implementing their ongoing projects under the 2014-2020 period. Meanwhile, discussions about post-2020 EU funding have already started. This debate is important now in order to defend the basic principles of the urban dimension in EU Cohesion Policy. The next two years will be crucial in defining the scope of future funding. By the end of 2017, the European Commission will release a proposal for the EU’s multiannual financial framework. In the event of the United Kingdom following a hard Brexit strategy, the financial scope for the cohesion policy is going to be diminished. At the beginning of 2018, the newly drafted European Structural and Investment Funds regulations are going to be released. Along with the debate about the future, the objectives of the EU Cohesion Policy are facing growing scepticism. Critical voices question the funding of integrated urban development projects with EU money – in particular those in better developed regions.

EU funding is more than a financial balance

EU-dimensionHowever, EU Cohesion Policy is more than just a financial compensation. In the past, it has stimulated member states to embrace crucial new approaches in the field of integrated neighbourhood development. Cohesion Policy has also added important topics to national and regional funding streams. Starting with the first pilot projects in the late 1980s, then the community initiative “URBAN” between 1994 and 2006, cities successfully tested the use of EU funds in valorising and stabilising deprived neighbourhoods – “Urban Acquis” was born. This is an integrated approach to implementing multi-thematic urban development projects by involving several stakeholders and citizens. Thanks to EU funding, the approach could be tested and rolled out in many European cities. It opened practitioners eyes to new and innovative thematic, governance and participatory approaches for integrated urban development. By setting high standards for planning prerequisites and implementation phases, the EU ensures high quality projects  (e.g. EUKN, 2011; Atkinson, 2014). Additionally, the EU developed a valuable exchange platform on integrated urban development projects by programmes like URBACT or INTERREG.

With the start of the 2014 funding period, the neighbourhood concept was widened to encompass urban-rural linkages. Newly introduced instruments like Integrated Territorial Investments (ITI) or Community-Led Local Development strategies (CLLD) allow a broader approach of intercommunal cooperation projects. These instruments have paved the way for flexible cooperation beyond administrative borders. And the majority of ties between municipalities will remain, even if funding for specific initiatives expires.

Through its regulative requirements, the EU influences local and regional development both directly and indirectly. Consequently, cities and regions need incentives to keep their competitiveness and fulfil EU requirements in areas such as climate change, decarbonisation or air quality. Additional global challenges, such as migration, or digitalisation, put enormous pressure on cities. Thus, the urban dimension in the EU Structural funds is essential – not only for the metropolitan regions of bigger cities, but also for small cities and towns in rural and remote areas.

Ease regulation, and strengthen ties with citizens

With the ERDF regulation’s Article 7, the European Commission provides an important legislative basis to anchor integrated urban development in the European Structural Funds. However, the high administrative burden of accessing funds became a basic critical issue for beneficiaries. For this reason the European Commission established an high level group on simplifying the ESI Funds in order to elaborate recommendation for the future cohesion policy periode. Additional politically driven investment tended towards financial instruments, like the establishment of the European Fund for Strategic Investments (EFSI). The EFSI is merely an investment instrument, leveraging private capital based on loans and venture capital. The majority of urban development projects however to not generate monetary backflows (e.g. for upgrading activities in the neighbourhood) and are dependent on grants. Thus, the EFSI could only be a complementary instrument to urban development projects from the European Structural and Investment Funds (ESI): The EFSI is “spatially blind” and concentrates primarily on single standing infrastructure projects which are not part of a comprehensive integrated strategy.

EU-dimension-2Another risk to lose the visibility of EU Cohesion Policy could be a too strong orientation towards highly technical and innovative projects. There is definitely a high need to support research projects; however, a unilateral concentration on “elite projects” brings with it the risk of EU funding losing contact with citizens – as there is not such a strong visibility in public. In contrast to the innovation dimension, urban development projects combine the refurbishment of built infrastructure with the implementation of social and environmental measures. Consequently, these projects help strengthen citizens’ positive identification with the European Union, because people see improvements in their daily life. In the ongoing debate on the future scope of EU cohesion policy, the retention of the urban dimension in the European Structural Funds has to be strictly defended: In the long run, it bears the potential to enhance the positive image of the EU.

The article is based on a comprehensive position paper of the German-Austrian URBAN-Network, gathering views and experiences from German and Austrian practitioners from municipalities, regional and national ministries, implementing urban development projects with ESI-Funds.

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