Commission to ditch regions with €800bn cash-for-reform plan

The Commission is set to push ahead with plans to condition farming and regional funds on domestic reforms in the 2028–2034 budget, according to a draft regulation seen by Euractiv.

The idea had already triggered months of backlash from 19 member states, 149 regions, and even Ursula von der Leyen’s own political party, the centre-right EPP, arguing that such a plan would erode regional autonomy and unfairly penalise local authorities for national-level decisions.

At the heart of it is a radical reshaping of the bloc’s two largest spending programmes: the Common Agricultural Policy (CAP) and Cohesion funds, meant for poorer regions across the bloc.

Brussels wants to fold the roughly €800 billion allocated to those funds into 27 national cash pots, making money contingent on EU-approved national reforms.

"Moving from close to 540 programmes to 27 National and Regional Partnership (NRP) Plans will reduce administrative costs" for EU countries and regions, the draft regulation reads.

Each government would be required to submit a national plan outlining its "agenda of reforms, investments, and other interventions," and would only receive funds after approval from the Commission and the Council.

The plan is inspired by the EU's €650 billion COVID recovery loan, where the Commission sidestepped regions by negotiating with capitals, leaving implementation in the hands of national authorities.

Critics all around

In July, the bloc’s own spending watchdog, the European Court of Auditors (ECA), slammed the COVID funding model. The Commission "absolved itself from financial management of the EU budget and transferred all the responsibility to EU countries," ECA President Tony Murphy told Euractiv.

It "was sold as an efficient instrument, but almost without fail every EU country has said it was actually worse," he added.

The Parliament has also rejected the idea. “We cannot accept a process where Parliament is only informed after key decisions are made or asked to rubber-stamp outcomes it had no role in shaping,” co-leader of MEPs budget position Siegfried Mureșan told Euractiv in April, adding that the national plans approach could violate the EU treaties. 

Still, the move is popular with Germany and other net contributors to the MFF, who would like to get policy concessions in return for their money.

Von der Leyen floated the idea of partnerships in May, but left open how far-reaching the reform would need to be, reassuring both regions and farmers that they would maintain a central place.

Farmers secured protection for their €291 billion in direct income support in the next budget, but saw their €96 billion regional fund fully subsumed, as first reported by Euractiv. However, the same does not seem to apply to cohesion funds. 

Death of structural funds

In the previous budget, cohesion was split among €226 billion in regional development funds (ERDF), €99 billion in social funding (ESF+), €48 billion for environment and infrastructure investment in the EU’s poorest regions, and €8.5 billion to support regions most negatively impacted by the green transition, the Just Transition Fund (JTF).

According to the draft, all of these – along with a range of other envelopes for various migration, crime, and border management (HOME) funds, farmer, and fisheries support – would be merged into a single mega-fund “European Economic, Territorial, Social, Rural and Maritime Sustainable Prosperity and Security Fund.”

The fund core is the National Plans, which will include envelopes for CAP and HOME funds. Instead of EU-wide thematic cash pots, the Commission wants to channel most spending through country-specific programmes, supplemented by a separate plan for jointly managed projects.

A new “Europe Facility” of dedicated crisis-response cash would also sit alongside the national plans.

The final version of the document, including funding numbers, is set to be presented on Wednesday.

Sofia Sanchez Manzanaro contributed to reporting. 

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UPDATE: This article has been updated to include criticism from the European Parliament and the European Court of Auditors regarding the COVID funding model that inspired the Commission’s proposal.