Complementarity between the RRF and cohesion: EU public policy governance in France
By Philippe Cichowlaz, French National Agency for Territorial Cohesion (ANCT)
For every multiannual financial framework period, setting up the right regulatory and procedural framework, and involving all actors well in advance, already poses quite a challenge. But the situation with regard to the new cohesion policy for 2021–2027 was exacerbated in 2021 by a new kid on the block: the Recovery and Resilience Facility (RRF) — the funding instrument at the heart of NextGenerationEu (NGEU) — which also came with a new modus operandi. Philippe Cichowlaz is Head of the European Cohesion Policy Division at the French National Agency for Territorial Cohesion, the body in charge of coordinating the EU structural funds in France. He explains how the French regional and national authorities prepared to implement the RRF, adapting their budget governance procedures to absorb the changes imposed by the new fund.
Shared regulatory analysis as a starting point
The European regulations are very specific — expenditure can never be covered by two different sources of EU funding1. Auditors whose work involves EU funds will readily understand the intentions behind this legislative provision, which safeguards the inherent added value of each policy and provides a mechanism to prevent duplication and consequently the risk of double funding.
While double funding is theoretically possible for any project in the interest of complementarity, in practice it is impossible to balance the equation in this way. For the average project it could even be counter-productive, given the administrative burden involved. Only a few major investment operations in cohesion countries and regions might provide sufficient justification, and then only in rare cases.
Shared acceptance of this principle between the technical services of the state (French National Agency for Territorial Cohesion) and the European directorates in the French regions (in their capacity as managing authorities for most EU funds) was the unavoidable prerequisite for them to negotiate a common methodology on the complex issue of coordinating the RRF and cohesion policy.
Joint state/regional governance of EU funds in France allows for ongoing structured dialogue
In 2013, France set up a joint State/Regions Committee to steer cohesion policy. The committee meets on average every three months during intense negotiation phases, as was mostly the case between 2018 and 2021. It was co-chaired during this period by the Minister for Cohesion Policy and the President of Régions de France (the representative body of French regions). The committee brings all regional elected representatives together with the main ministries, and enables key decisions on the implementation of EU funds to be taken on the basis of a shared agenda and prior technical analysis. The establishment of governance in partnership addressed the need for coordination arising from the new decentralisation laws, which delegated management of the European Regional and Development Fund (ERDF), the European Agricultural Fund for Rural Development (EAFRD), 35% of the European Social Fund (ESF) and half of the European Maritime and Fisheries Fund (EMFF) to the regions for 2014‑2020.
Cohesion policy, the main European investment policy (around 2% of total public investment), is therefore mainly implemented in France by regional authorities. The 2021‑2027 programming process began relatively early, just after the draft regulations were published on 28 and 29 May 2018. At that time, the Commission was still hoping for the adoption of the 2021‑2027 regulations before the end of the European parliamentary term, and made this known to the entire partnership. To ensure a certain political and budgetary discipline this meant being ready by 1 January 2021, so the partnership agreement and programmes would need to be submitted in mid‑2020. The strategic basis for cohesion policy was already confirmed, and the Commission’s intentions — as expressed through the regulations and country reports — were sufficiently precise to allow progress as soon as both the regulations and country reports became available in early 2019.
In 2019, therefore, the first meetings of the State/Regions Committee approved the architecture for EU funds in France for 2021–2027. This involved appointing managing authorities, reducing the number of programmes, dividing the budget envelope among programmes, diagnosing and evaluating thematic investment priorities, etc.
Thus, when the COVID‑19 crisis hit Europe at the beginning of 2020, each managing authority already had in mind how it intended to use the 2021–2027 EU funds. In France, regional elections were still a long way off (June 2021), and even though everyone was beginning to doubt that the regulations would be adopted in trilogue in time for the launching of the programmes by the 1 January 2021 deadline, this did not adversely affect the carefully decided substance of the initial programming intentions. The projected €17 billion for cohesion policy had been distributed in an indicative manner to programmes, and the regions which had absorbed the lion’s share of
2014–2020 funding were already thinking of their future priorities. Thus, when the Heads of State and Government agreed on NGEU in July 2020, the draft partnership agreement for cohesion policy was already well advanced and some regions had already inked in their main schemes. At that time, nobody had any idea that the regulations would not be validated until June 2021.
When, in the run‑up to summer 2020, it became clear that the priorities of the French National Recovery and Resilience Plan (NRRP) would be those that had prevailed for cohesion policy (namely as described in the 2019 country report and its 2020 update), it became obvious that there was a risk of direct technical and political competition. Competition between the €16.77 billion under cohesion policy (supplemented by more than €3.9 billion in appropriations from Recovery Assistance for Cohesion and the Territories of Europe (REACT‑EU) and the Just Transition Fund (JTF)) and the almost €40 billion estimated at the time under the NRRP. At the time, regional authorities still considered it quite likely that the partnership agreement and programmes would be submitted before the NRRP. It was also believed that the regions would be able to rely on their earlier discussion of the operational implementation of country‑specific recommendations, a factor which might have meant the NRRP having to adapt to regional choices rather than the other way round.
On the other hand, the need for rapid recovery had become clear to all, including the regions. Pre-empting official approval for the regulations, France had already started preparing a €100 billion national recovery plan, which was adopted in early September 2020. This rapid response meant that it would be difficult for France to enter into the extremely complex exercise of incorporating specific regional programming intentions. While the cohesion discussions had indeed begun first, specific measure‑by‑measure programme choices were still a long way from official approval and had not been put to a formal vote in any region.
In other words, the lengthy preparation time imposed by the structural nature of cohesion policy had been outpaced by the urgent need for recovery. France’s territorial needs, in the midst of an economic crisis, had to be met by combining the two policies. Even so, they were still insufficient to meet all the economic, social, environmental, technological, digital and public health challenges, to name but the main ones. The recovery package involved a tremendous acceleration in priority investments while enabling cohesion policy to continue in the medium to long term with a much stronger territorial focus. The challenge was to avoid pitting cohesion against recovery, and instead make the two complementary. It was also to anticipate the administrative capacity to absorb the €61 billion (2)by simplifying coordination as much as possible. It was therefore becoming essential to prevent double funding by clearly marking a policy divide.
A best practice guide to building policy solutions that work
At this time, the regions had just taken advantage of the flexibility offered by the Coronavirus Response Investment Initiative (CRII) to reorient their 2014‑2020 programmes, demonstrating real agility in the midst of the crisis. It became clear that the same agility should override the risk of double funding. A solution had to be found in the form of swift political compromise to establish clear dividing lines that would allow each party to move forward safely at its own pace amid shifting EU negotiating schedules.
The State/Regions Committee met at the end of 2020 to discuss this complex calibration issue. The permanent nature of collaboration between the state and the regions greatly facilitated their reaching a technical consensus. What might have appeared to be a major regulatory difficulty thus became a purely political issue, although this too might be difficult to arbitrate if one or more parties were asked to abandon priorities that were already firmly established in their policies.
The initial discussions were not easy, as the regions were already more advanced in their programming than the state. It quickly emerged that specific work in all areas was the key to moving forward pragmatically. The State/Regions Committee therefore decided to draw up a guide3 dealing with the calibration issues specific to each area of policy, and to postpone final decisions to a later date (see also Box 1).
What one might label impossible negotiation on the primacy of one mechanism over the other thus rapidly gave way to operational calibration work. Some 30 thematic meetings took place over a two-month period in early 2021 to discuss the most suitable dividing lines between cohesion and recovery, particularly in areas which both marked as priorities — most importantly the green/digital deal.
At these meetings, officers responsible for managing NRRP measures shared the specific nature of each measure with a panel of programme representatives and all present concluded on the simplest and most efficient dividing lines. It soon became clear that the key to efficiency lay in the unrestricted sharing of information and arbitration at national level to avoid the confusion of ‘à la carte’ dividing lines, which would have made overall management even more difficult and slowed implementation.
The comprehensive approach also made it possible to address potential areas of overlap with funds remaining from the 2014‑2020 period. Management of those funds must give clear primacy to cohesion projects that, for the most part, were already underway. The need for meticulous examination led to the creation in each region of a co-funding committee comprising representatives of the state, state agencies responsible for the RRF, and the regional managing authorities, which had comprehensive lists of operations.
Progress on the RRF was significantly faster than scheduled in the first quarter of 2021, giving rise to the hope that submission might be imminent. On the cohesion side, however, it became clear that it would no longer be possible to adopt the 2021‑2027 rules before the end of the first half of 2021. The COVID‑19 crisis and the European Parliament’s legislative calendar had thus inadvertently contributed to a reversal of the schedules. After several iterations, the calibration guide was thus formally adopted by the
State/Regions Committee. It was also used to inform Chapter III of the NRRP, which was finally submitted in spring 2021 and adopted by the Commission on 21 July 2021.
All’s well that ends well
The delays affecting the finalisation of cohesion policy for 2021–2027, which were largely offset by the mobilisation of REACT‑EU, meant that the French partnership agreement was eventually submitted on 17 December 2021, to be followed by the programmes on 17 March 2022. There was thus every opportunity to ensure that no programme priorities overlapped with the NRRP, and plenty of time in which to justify and negotiate priorities with regional partnerships, even though this undoubtedly gave rise to some legitimate regrets, which the simplification process was able to mitigate.
From this point of view, this topic is a perfect illustration of the difficulties in budget governance when it is not made a prerequisite to clarify responsibilities. However, since in this case the Commission’s aim was to increase the leverage of EU policies in a crisis situation, the efforts made were perfectly justified.
(1) From Article 9 of the RRF Regulation (Regulation (EU) 2021/241): ‘Support under the Facility shall be additional to the support provided under other Union programmes and instruments. Reforms and investment projects may receive support from other Union programmes and instruments provided that such support does not cover the same cost’.
(2) The €100 billion NRRP includes €40 billion in EU funding from the RFF to France, as well as €16.77 billion in cohesion funding and €3.9 billion from REACT‑EU and the JTF. The total EU contribution to France NRRP was therefore just under €61 billion.
(3) [Guide] Articulation de la facilité pour la reprise et la résilience avec les fonds de la politique de cohésion européenne, at L’Europe s’engage en France, the portal for EU funds.
This article was first published on the 1/2022 issue of the ECA Journal. The contents of the interviews and the articles are the sole responsibility of the interviewees and authors and do not necessarily reflect the opinion of the European Court of Auditors.