Regions ring alarm bell over proposed EU competitiveness fund

The European Commission’s proposal to bundle most EU research programmes into a competitiveness fund spells trouble for regional innovation, according to the European Committee of the Regions.

As the pendulum swings towards big, policy-driven pots of money, the committee fears the shift may come at the expense of place-based innovation and deepen Europe’s innovation divide.

The concerns are outlined in an internal document, seen by Science|Business, which complains that the proposal to set up the competitiveness fund, “says little about how to overcome the innovation divide or how to promote place-based innovation.”

The Commission’s proposal came to light last week in a leaked memo setting out a plan to bundle all R&I money into a new competitiveness mega fund, to be launched under the next EU seven year budget that starts in 2028.

The competitiveness fund would include most of Horizon Europe’s successor, Framework Programme 10 (FP10), the European Defence Fund, the Innovation Fund, InvestEU, the Single Market programme and policy-specific funds for health, space and digital innovation.

This combined fund would be disbursed in support of a specific policy agenda. As things stand, the Commission believes the existing individual programmes are too complex and slow, and not strategic enough. This makes it difficult for industry in particular to take advantage of them.

In addition, the oversight and management of so many individual programmes is a considerable overhead for the Commission.

The proposal is part of a wider effort to streamline and concentrate the EU budget under four budget headings, and would involve shifting the focus to big projects that aim to enhance Europe’s global competitiveness.

This aligns with the recommendations of former Italian prime minister Mario Draghi, in his monumental report on remedying Europe’s poor global competitiveness standing.

But the proposal isn’t seen as good news by Europe’s regions. For years, the EU has been trying to close the gap between its innovation hot spots and those regions with less innovation potential. That strategy seems to have taken the backseat in the competitiveness fund plan.

“It seems that the proposal relies heavily on key findings of the Draghi Report  which very much advocates scaling up the efforts to boost competitiveness and to promote world class excellence,” the regions say. They fear this will leave them behind.  

Demands for FP10

The Committee of the Regions set out its position on the competitiveness fund last week when it also adopted a draft opinion setting out its demands for FP10, in which the regions want to see a more place-based approach to strengthening Europe’s research ecosystem. The committee says that increasing participation of regions that fare poorly in the EU innovation rankings is crucial to boosting the bloc’s competitiveness overall.

"The objectives of scientific excellence and territorial cohesion in terms of R&I are not incompatible," said Anne Besnier, the committee's rapporteur for the opinion.

The committee also calls for more synergies between different EU funds. The regions want the next budget to allow for multi-annual R&I programming that combines funding from different sources. Alongside this, the committee recommends introducing more uniform rules for projects funded under different funds.

Echoing calls from many in the research community, the committee also wants to see a significant increase in funding for FP10, and for measures to safeguard the research budget from cuts.

The regions also warn the Commission’s proposal to divide the EU budget into four could leave the proposed competitiveness fund susceptible to cuts, because the final decision on the shape and size of the next EU budget is in the hands of the member states. The regions say the member states are likely to introduce legal protections against cuts to the part of the budget that includes all funding that goes directly to member states, such as cohesion and agriculture funds.

This could leave the competitiveness fund, a part of the budget managed by the Commission, unprotected when new funding needs inevitably arise.

“While it is highly likely that the member states will ensure that their envelopes are ringfenced […] the pressure to reallocate funds from the EU budget will fall on the centrally managed funds,” the Committee of the Regions said in the leaked memo.