Innovation, Enterprises & Jobs: The Role of Cohesion policy Katja Reppel Deputy Head of Unit CC Smart and Sustainable Growth DG and Urban
Structure 1. Cohesion support for SME 2. Smart specialisation strategies 3. Synergies with COSME and Horizon 2020 2
Basics on current Cohesion 347 billion in 2007-13 COHESION POLICY = & Urban : ERDF, incl. INTERREG, Cohesion Fund ( basic infrastructures) Social : ESF OTHER POLICIES RELATED TO COHESION Common Agricultural and Rural Development (EAFRD) Common Fisheries (EMFF) Convergence objective: regions with GDP per capita under 75% of the EU average. 81.5% of the funds are spent on this objective. competitiveness and employment objective.
Planned investments of total ERDF and Cohesion Fund ( 271 billion): Unlocking growth potential by promoting research and innovation in all regions: Environment In less developed Transportregions, ERDF is the most important source of funding for research and innovation! Research/Innovation 86 billion for research and innovation, over 25% of total cohesion policy budget: - R&I capacity-building and infrastructure: over 50 billion - Entrepreneurship: over 8.3 billion - ICT capacities, research and takeup: over 13 billion - Human capital for innovation: over 14.5 billion Information society Social infrastructure Energy Tourism Culture Institutional capacity
71 billion for business, incl. SME + innovation support 2007-2013 Cohesion programmes: Innovation, RTD and ICT in business: 26.3 billion wide range of mainly ERDF supported measures that are SMEs dedicated (i.e. technology transfer, eco-innovation, e-commerce). It includes ESF and ERDF support to business start-ups. Other SME and Business support: A further 30.7 billion predominantly for SMEs but may also benefit large companies. It includes measures approved under regional aid, R&D&I, environment and risk capital guidelines and generic access to finance through financial engineering instruments (loans and guarantees). Labour Market in firms: 12.7 billion measures targeting continuous training, restructuring and innovative work practices mainly from the ESF. Large firms and SMEs benefit indirectly from Cohesion investment through public procurement with an estimated 46% of the total cohesion policy budget (some 159 bn).
71 billion for business, incl. SME + innovation support 2007-2013 Cohesion programmes: Access to finance for SMEs Financial instruments (loans, guarantees or equity, venture capital and other financial products) represent around 5% of total ERDF resources (and in particular more than 10% of all ERDF business support), i.e. some EUR 10.5 billion of OP contributions were paid to FEIs in more than 800 funds set-up in nearly all Member States (except Luxembourg and Ireland). Until October 2013 of this amount some EUR 4.5 billion were effectively paid to enterprises The ERDF part of the financial instruments represented some EUR 5.6 billion, the remaining stem from the ESF (EUR 200 million) plus national public and private contributions (EUR 3.1 billion).
SME support through CP: What has been achieved? 2000-2006 period: some 235,000 SMEs or more received direct financial support over 1 million SMEs got non-financial support (advisory services, networking) around 2.2 million jobs created (with projects actually finalising until 2009), mostly in SMEs (we expect a similar figure by the end of the current period) 46,000 research and development projects received support with the creation of over 20,000 new long term research jobs Current 2007-13 period (status: end 2012): More than 15 900 cooperation project enterprises research institutions. More than 20 700 ICT projects More than 53 100 start-ups More than 53 200 RTD projects and more than 15 600 Research jobs created More than 160.000 of SMEs and micro-enterprises supported; At least 44.000 of jobs created through financial instruments; See Strategic Report 2013:http://ec.europa.eu/regional_policy/how/policy/strategic_report_en.cfm#sr2013
Billion EUR Less developed regions 164.3 Transition regions 31.7 More developed regions 49.5 Cohesion Fund 66.4 European territorial cooperation 8.9 Of which Cross border cooperation 6.6 Transnational cooperation 1.8 Interregional cooperation 0.5 Outermost regionsand northern sparsely populated regions 1.4 Youth Employment initiative 3.0 TOTAL 325.1
Thematic concentration of the ERDF Research and Innovation Access and use of ICTs * At least two of four themes must be selected SMEs competitiveness Energy efficiency and renewable energy (compulsory) 60% * 45% * 38% * 20% 15% 12% Developed regions: 80% Transition regions: 60% Less developed regions: 50% (and all island regions in Cohesion MS)
Innovation concept in Cohesion SME competitiveness: IP3 (a) promoting entrepreneurship, in particular by facilitating the economic exploitation of new ideas and fostering the creation of new firms, including through business incubators; (b) developing and implementing new business models for SMEs, in particular for internationalisation; (c) supporting the creation and the extension of advanced capacities for product and service development; (d) supporting the capacity of SMEs to engage in growth in regional, national and international markets, and in innovation processes; RTD and innovation: IP 1 (a) research and innovation infrastructure and capacities, centres of competence; (b) business investment in innovation and research, synergies between enterprises, R&D centres and higher education, product and service development, technology transfer, social innovation, eco-innovation, public service applications, demand stimulation, networking, clusters, technological and applied research, pilot lines, early product validation actions, advanced manufacturing capabilities and first production, in particular in Key Enabling Technologies and diffusion of general purpose technologies, Low carbon economy: IP4 (a) production and distribution of energy derived from renewable sources; (b) energy efficiency and renewable energy use in enterprises; (c) energy efficiency & renewable energy in public infrastructures & housing sector; (d) smart distribution systems (e) low-carbon strategies for urban areas, sustainable multi-modal urban mobility (ea) research & innovation and adoption of low-carbon technologies; (g) co-generation of heat and power Human Capital, Skills & Mobility: ESF (c) post-graduate studies, training of researchers, networking activities, partnerships between higher education institutions, research & technological centres and enterprises; (d) adaptability of enterprises and workers and increased investment in human capital. Etc. Access, use & quality of ICT: IP 2 (a) extending broadband deployment and the rollout of high-speed networks, adoption of emerging technologies and networks for the digital economy; (b) developing ICT products and services, e-commerce and enhancing demand for ICT; (c) strengthening ICT applications for e-government, e-learning, e-inclusion, e- culture and e-health;
by the way: For SMEs in agricultural, food and forestry sector and operating in rural areas: EAFRD: enhancing competitiveness of all types of agriculture and enhancing farm viability through training or other knowledge transfer and information, advisory services for farm management, quality schemes for agricultural products and foodstuffs, investments in physical assets, farm and business development, including start-up aid and non-agricultural activities For SMEs in fisheries and aquaculture sectors: EMFF: diversification of fisheries activities into other sectors of maritime economy, innovative, competitive and knowledge based fisheries and aquaculture through innovation and knowledge transfer, enhancement of the competitiveness, development of new professional skills and lifelong learning 11
SMEInitiative: newinfisectionofcpr Objective Increase the volume of lending to SMEs in the EU; Pooling resources: European Structural Investment Funds + COSME +Horizon 2020 Combine and fully use EIB and EIF and possibly National Promotional Banks' capacities; Providing Capital Relief to EU banks to incentivize additional loans to SMEs; Act fast and achieve significant impact to stimulate SME financing and economic growth: Stimulate SME financing and economic growth; Fight EU fragmentation; Develop non-banking financing for SME. Main features: Legal basis Article 33bis CPR: Setting up a single dedicated OP at MS level; Ex-ante assessment carry out by the EIB and Commission; Indirectly managed by the Commission and EIB for the implementation; Voluntarily contribution (ERDF EAFRD) from MS; Significant participation are needed to create VA: up to 7% of ERDF EAFRD per MS and capped to EUR 8.5bn from ESIF Funds; Contributions from EU's COSME (175 mil) and Horizon 2020 (175 mil); Possible contributions from national promotional banks and/ or private investors; Various financial instruments proposed using securitisation techniques. 12
Guidance on SME support 1. Support services are part of an eco-system should be aligned with the RIS³ priorities should match ERDF priorities, i.e. R&D+I or competitiveness 2. Be specific to target well the different types of SMEs Innovation Markets Knowledge intensity 3. Support services have to take into consideration: The capacity and capability of the entrepreneur to manage the innovation cycle The need to receive financial and non-financial support First-time innovation or internationalisation 4. Avoid: One size fits all Fragmentation of the offer Buzz and vintage Business as usual 5. Evaluation and impact assessment are more than: An eligibility check & transaction count It requires a regional intelligence system! See: http://s3platform.jrc.ec.europa.eu/guides
RIS 3 SUPPORT SERVICE ECO-SYSTEM Barriers Cost & Financing Marketing Competition Information Talent Education Talent Skills Vocational training Students outplacement Loans Guarantees Equity Grants Investment readiness RDAs e-platforms Brokers Voucher issuers Research centres TTO Technology centres Open innovation platforms Collaborative projects Sustainable development Ageing population Social innovation Intervention R&D policy Entrepreneurship Infrastructure Education Business environment Tax Incubator Living labs Prototyping Design center Science parks Fab labs Global competition Standards Procurement First client Type of enterprises Spin-off Gazelle Hidden champions Large enterprises Support services Coaching Mentoring Professional services Clusters/interclusters University-enterprise partnership Diaspora
Structure 1. Cohesion support for SME 2. Smart specialisation strategies 3. Synergies with COSME and Horizon 2020 15
What is Smart Specialisation? = fact-based: all assets = no top-down but dynamic /entrepreneurial discovery process for shared vision among innovation stakeholders, in particular business = All forms of innovation not only technology and research driven = eco-systems: creating environments for change, not accumulation of disconnected projects = Mobilisation of investments and synergies across different departments and governance levels (EU-national-regional) = source-in knowledge, & technologies = Be different! = competitive advantages, potential for excellence, opportunities = global perspective on potential competitive advantage + potential for cooperation, global value chains = Concentration of resources on priorities, problems and core needs + accumulation of critical mass also across borders = no focus on single sector / tech., but cross-fertilisations, rejuvenating sectors through higher value-added activities + emerging sectors / areas for place-based economic transformation!
Business manufacturing and services, primary sectors, financial sector, creative industries, social sector, large firms, SMEs, young entrepreneurs, students with business ideas, cluster and business organisations, Different departments, if relevant at different government levels, agencies e.g. for regional development, business advice, public procurement offices, incubators, etc. Public administration Entrepreneurial in: - Composition and - Spirit: (risk-taking, broader view beyond boundaries, creativity ) Research public and private research bodies, universities, science and technology parks, NCPs, Technology transfer offices, Horizon2020 committee members, regional ESFRI roadmaps etc. NGOs and citizens initiatives related to societal challenges for which innovative solutions would be helpful, consumers associations, Talents! etc. Civil society / Users The essence of RIS 3 : Entrepreneurial discovery process! Detect potential boundary-spanners between different stakeholder / interest groups, new innovative entrepreneurs, hidden champions, or persons with a potential for this Horizon2020 related actors should be involved in the creative strategy development process. See new annex III of RIS3 Guide: http://s3platform.jrc.ec.europa.eu/s3p guide
State of play as regards RIS 3 compliance Mixed picture: SWOT or similar analysis: inward looking, no demand side, purely tech focused Limited number of priorities: coffee for all; too generic Measures to stimulate private R&I investments: retro-fitting; not tailored to enterprises Monitoring system (and indicators): mostly absent or not realistic or no causality Budgeting plans: mostly inexistent, if yes, unclear funding gaps for ESIF
Structure 1. Cohesion support for SME 2. Smart specialisation strategies 3. Synergies with COSME and Horizon 2020 19
Bringing together 2 different worlds? Horizon2020 Non-territorial, mainly transnational approach based on excellence; Horizon 2020 does not take into account geographic specificities in allocating funding. Focus on individual R&I projects tackling the whole cycle of innovation, taking into account strategic approaches at EU level, e.g. through European Innovation Partnerships and the Strategic Energy Technology plan (although some programme co-funding for research coordination like ERA-NETs, etc.) Centrally managed (EC) and awarded directly to final beneficiaries or managed by a multi-country entity; In the case of Erasmus+, partially decentralised and awarded through National Agencies Competitive calls for proposals addressed to international groupings (including beyond the EU) without geographic preallocation. (European Research Council and Marie Skłodowska- Curie as well as Erasmus+ actions for learning mobility also address individuals) ESIF Place-based approach supporting economic and social cohesion Largely focused on improving the R&I capacities and R&I eco-systems with the objective of regional growth and place-based economic transformation towards higher added value and more knowledge-intensive activities (smart specialisation strategies). Shared management with national and regional public intermediaries (managing authorities, implementing agencies and intermediate bodies) which define the implementation details and allocate the funding to final beneficiaries -related prioritisation based on cohesion considerations and RIS3 priorities with allocation to individual firms/bodies and consortia within the territory covered by the operational programme (and only within the EU). Use of competitive attribution through calls and aid 20 schemes based on project selection criteria is also increasingly used (depending on MS).
New Regulations enable more synergies (1) More spendingousidetheop territoriespossible:article60(2) CPR: 15% oferdf, CF andemff maybespent outside OP territory (5% EAFRD) + Art 87(3) CPR: OP hasto describe arrangements for inter-reg. & trans-nat. actions with beneficiaries located in at least 1 other MS = opportunityforco-investment in transnational infrastructures and actions(e.g. joint cluster initiatives, shared reserach infrastructures ) Alignment of similar cost options possible for easier combining of funds: lump sums, flat rates (up to 25% of direct costs delegated act will follow), unit costs under ESIF may use the H2020 rules applicable for similar types of operations and beneficiaries (see: Art 57, 58 CPR & H2020 rules for participation) = opportunity for less red-tape and accounting problems for successive projects from ESIF or Horizon2020 or projects taht combine the funding 21
New Regulations enable more synergies (2) ESIF Art. 55(8) CPR: "An operationmay receive supportfrom one or more European Structural and Investment Funds or from one or more programmes and from other Union instruments, provided that the expenditure itemincluded in a request for payment for reimbursement by one of the ESI Funds does not receive support from another Fund or Union instrument, or support from the same Fund under another programme." Horizon2020 Article 31 Rules for Participation: "An actionfor which a grantfrom the Union budget has been awarded may also give rise to the award of a grant on the basis of Regulation [Horizon 2020] provided that the grants do not cover the same cost items." = exemption from the non-cumulative principle of Art. 129 Financial Regulation! = A beneficiary may receive more than one grant for the same project / action Expenditure item = Cost item Project in the synergies context = an operation with several components / actions with several grant agreements / contracts In other words: Project grant ageement!
Combination in same project Project Concept & planning Coherent project concept and with identified work packages (ideally geographically attributable) or cost / activity categories attributed clearly to H2020 or an ESIF OP. Includes at least partners from 3 countries, Content & purpose of the project is related to RIS3 specialisations & OP priorities Available possible budgets identified (H2020 work programme: future calls for proposals), eligible costs & co-funding levels for H2020 and ESIF respectively taken into account. Scope for pooling resources for joint activities / work packages across borders identified.
Hypothetical combination in same project Project with combined funding Concept & planning Horizon2020 ESIF actions Coherent project concept and with identified work packages action: (ideally geographically Eligible attributable) cost: or cost / activity categories attributed clearly to Call H2020 for proposals Purchase of R&D an ESIF OP. equipment and Includes at least partners from 3 countries, Eligible Content cost: infrastructure & purpose of the project is related to Coordination RIS3 specialisations ; R&D entrepreneurship & OP priorities ( staff Available ; consumables possible ; budgets training for researchers identified (H2020 work programme: future calls for proposals), eligible costs Budget: & co-funding levels for H2020 Budget: and ESIF respectively 70% taken H2020 into account. ESIF from different + Scope 30% own for pooling public or resources OPsfor joint activities / private work packages funds (no across borders + relevant identified. % of own ESIF!) public funds (no H2020!) H2020 grant ESIF grant1 ESIF grant2
Other EU programmes: different Art 129 FR applies to Erasmus+, Creative Europe, COSME, i.e. for synergies with ESIF there needs to be clearly a different action or different beneficiaries. Parallel or sequential projects are possible. "exception of the non-derogation": EEN may be used to deliver specific services on behalf of ESIF OPs See: Article 10 COSME regulation: Enterprise Europe Network (2) The Network may also be used to deliver services on behalf of other Union programmes such as Horizon 2020. This may include dedicated advisory services encouraging SME participation in other Union programmes. The Commission shall insure that the various financial resources for the Network are coordinated efficiently and that services delivered by the Network on behalf of other Union programmes are funded by those programmes. 25 [=no double funding!]
What are synergies? What is combined funding? Basic principle 1: NO substituting of national or regional or private cofunding to centrally funded EU projects or programmes by ESIF money! Synergies are about obtainingmore impacts on competitiveness, jobs and growth by combining ESIF and Horizon2020, about amplifying projects of the other fund or carrying further the projects of the other fund. MA should notfocus on acquisition of additional funding from H2020, but on what is the strategic aim of RIS3 & OP.
What are synergies? What is combined funding? Basic principle 2: NO double funding : two Union grants (e.g. Horizon 2020 and ESIF) may not cover the same cost item. Combined funding is the possibility to use different public funding sources, including EU funding sources, within a programme, project or a group of projects. It seeks to exploit complementarities and synergies while at the same time needs to avoid overlaps and exclude double-financing. 27
What are synergies? What is combined funding? Basic principle 3: Synergies is more than combining ESIF and other Union grants in the same project! Synergies can be about bringing together Horizon2020 and ESIF money in a same project (Art 55(8) CPR + Art 31 H2020 RfP), but: Accounting-, sychronisation- and organisation-wise it is easier to use successive projects that build on each other or parallel projects. For the other EU centrally managed Union programmes, the non-cumulative principle applies, i.e. combination of grants in same project for same beneficiary is not possible.
Main message: Think strategy & impact, not project! 29
Need for better and more strategic coordination on BOTH sides and at all stages! Strategy development comes first: IncludeHorizon2020 actors (Researchers, members of the programme committee, EIPs, ETPs, EIT-KICs, PPPs (JTIs), MarieCurie centres, research institutions with success in FP7, EUREKA, National ESFRI Roadmaps) in the entrepreneurial discovery process to design RIS3 and get involved in structured cooperation / delegated implementation of H2020. See: RIS3 guide, annex III Programme development: Open OPs for transnational activities, foresee H2020 compatible / complementary support forms that could help attaining the economic transformation objectives of your RIS3. Team up with other MS/regions around RIS3 fields instead of waiting for H2020 calls. OP implementation Design OP management system and project selection methods to be able to synchronise award decisions with H2020 calls & evaluations. Foresee support to applicants for finding international partners, etc.
Need for better and more strategic coordination on BOTH sides and at all stages! Horizon2020 implementation Open strategic platforms (EIPs, EIT-KICs, ETPs, ) and structured cooperation (JPI, JTI, ) for regional level policy actors. Facilitate access to ESFRI infrastructures for industrial users and integrate them in industrial clusters Implementation officers in RTD, CNECT, EAC, ENTR etc. should design work programmes, implementation documentation (e.g. standard letters, guidance for applicants & evaluators ) and tools (participant portal) in an synergies friendly way, incl. taking RIS3 fields and ESIF implementation timelines into account. Revamp the transfer of technology and research results to better target it to MS/regions according to their RIS3 specialisation fields and OP priorities. AND H2020 managers need to acknowledge that: Cohesion 's objective is to improve regional economies, not to fill H2020 budget gaps! ESIF can only support projects contributing to placebased socio-economic development, not projects for "purely" scientific purposes and not research infrastructures that do not clearly benefit the socio-economic development, territorial cohesion and structural adjustment of regional economies!
Need for better and more strategic coordination on BOTH sides and at all stages! Communication & exchanges of information: Both sides need to improve the understanding of the objectives and management principles of the other side (external). Training for RTD, CNECT, ENTR, REGIO, EMPL, AGRI, etc staff, external evaluators on synergies with ESIF Use NCPs, EENs, COCOF, MA meetings, etc. to ensure information flow during implementation and Strengthen the collaboration of the NCPs with MA and regional structures of support Synergies tracking systems should be installed on both sides Auditors need to be informed & trained on both sides on new synergies possibilities and different accounting systems, terminologies, etc.
Links and documents Common Provisions Regulation for the European Structural and Investment funds: http://ec.europa.eu/regional_policy/what/future/proposals_2014_2020_en.cf m Horizon 2020 proposed regulations rules for participation, PPP & P2Ps: http://ec.europa.eu/research/horizon2020/index_en.cfm?pg=h2020- documents COSME regulation: http://ec.europa.eu/cip/cosme/ Erasmus plus regulation: http://ec.europa.eu/education/news/20130719- erasmus-plus-preparation_en.htm Creative Europe: http://ec.europa.eu/culture/creative-europe/index_en.htm Digital service part of CEF: http://ec.europa.eu/dgs/connect/en/content/public-services-digital-serviceinfrastructures-connecting-europe-facility For end beneficiaries in 2007-13 period: Practical guide to EU funding opportunities for research and innovation: http://ec.europa.eu/research/regions/documents/publications/new_practical_ guide.pdf 33