Can research and regional programmes work together?

Here’s a puzzle for you: Let’s say you are a local government official in Spain’s Extremadura region, and you want to find some European money to modernise the economy with hot new technology companies. You can apply for Structural Funds for the buildings and routers, and Horizon 2020 money for the researchers and start-ups. But how to get it all happening at once?

So far, that’s been difficult – but there’s growing pressure to improve synergies between these two big EU funding lines. The goal: to make the two sources of funding complement each other, and coordinate better, so it’s easier for regions to tap EU support. Innovators might not care where the money is coming from so long as they can get it.

Discussing how to boost synergy was the aim of a 7 March workshop in Brussels organised by Science|Business and the European University Association (EUA). The group came up with six practical suggestions, from coordinating the two funding lines’ rules to exempting more projects from state aide restrictions. The issue is rising higher on the EU agenda this year, as the EU starts shaping its next long-term budget.

The benefits of better synergies are numerous, workshop participants said. For instance, it could let the Commission fund a lot of excellent research projects that didn’t get grants from Horizon 2020, because of programme over-subscription. The Commission estimates that, to date, €66.3 billion in additional funding would have been required to fund all proposals rated excellent but for which there was not enough budget.

Better synergies would also spread the money more fairly and effectively. Right now, 90 per cent of Horizon 2020 funding is going to the older, richer EU member states, while 80 per cent of Structural Funds goes to the newer, mostly east European, member states. “This is not sustainable for the future,” said Lambert van Nistelrooij, a member of the European Parliament’s regional development committee.

And at present, there’s still too much of a tendency to want to spend Structural Funds on roads and bridges, rather than technology and talent.  “We don’t want to give them (budget) envelopes to make even more roads,” said van Nistelrooij. “It happened in Spain where everyone expected that roads would make industry come. The industry is now in Asia.”

The Commission hopes that new priorities in the EU budget will pressure member states to think more strategically and support more innovative projects at the regional level.

Here are some of the suggestions for synergy raised at the workshop:

1. Coordinate the rules for all research funding streams

Many research projects cannot be funded from other sources than the EU Framework Programme due to a wide range of reasons, including but not limited to tight state aid rules, incompatibility of regulations and poor strategic planning in some member states.

That is why stakeholders are urging the Commission to do its part and coordinate the rules for all of its research funding streams. “In the future Framework we should have an ex-ante conditionality that the compatibility of [funding] instruments is ensured,” said Peter Haring Bolívar, vice-rector for research at the University of Siegen, and chair of the EUA Expert Group on Research and Innovation Strategies for Smart Specialisation mart specialisation (EUA RIS3).

Research infrastructure projects also could benefit from a single funding source which can be used from the beginning to the end of a project, but such a facility is not yet available.

In a briefing paper published recently, the European Court of Auditors also recommends the creation of better synergies between different funding streams for research. A “one-stop shop” for researchers who do not receive funding from EU’s research Framework Programmes, but do not receive a grant from Framework Programme 9 would allow them to get money from other EU programmes, without needing to reapply.

2. Exempt more research-related funding from state aid rules

State aid rules are another potential obstacle to synergy. Projects funded through Horizon 2020 are exempt from state aid provisions, which are designed to prevent governments from distorting the market by subsidising big private projects. But by contrast, those funded through the European Regional Development Fund (ERDF) are not exempt; they are often bigger and more directly related to the market. This paradox hinders the ability of member states to allocate regional funding to research projects. What’s needed is a broader exemption, participants said.

However, others argued that the state aid rules should be dealt with immediately. “If someone receives a Horizon 2020 seal of excellence, that is a good proof for exempting the project from the state aid rules,” said Edit Herczog, an innovation consultant and former member of the European Parliament.

3. Enforce the seal of excellence

In recent years, the European Commission has been trying to convince member states to tap into ERDF money to build up innovative capacities equally across regions. However, poorer member states are still at the bottom of research and innovation league tables, as Horizon 2020 applicants from those countries are struggling to compete with better-funded counterparts in older EU members.

To help fix that, the Commission introduced a “seal of excellence” certificate in Horizon 2020 for project proposals that were rated highly, but for which no money was available. The idea: with that quality stamp, the projects should be able to raise money easily from better-funded Structural Funds initiatives. In fact, few member states have so far agreed to fund any of those projects, partly because the administrative burden was too high.

The main weakness of the seal of excellence is that it is totally up to the member states to accept it or not. For over a decade now, the main priorities of newer member states were to balance national budgets and reduce the external debt. Research and innovation are not very high on their to-do list. .

The seal of excellence could work better if member states were forced to allocate a share of ERDF money to fund these projects. It could also be explored to widen the scope of the seal of excellence to support research by top-ranked, geographically balanced collaborative consortia in order to provide higher value for investment for member states.

4. Make ‘smart specialisation’ smarter

In recent years, the Commission has been requiring regions that want certain types of Structural Funds to develop “smart specialisation” strategies first – in essence, develop formal long-term business plans for the region rather than spend the money at will.  Some participants said they see this strategy working, but not yet fast enough: the Commission should “aim to double smart specialisation money,” said Herczog, so that member states have access to the funding needed for long-term strategic projects.

But this money should have some strings attached, said Van Nistelrooij. Regions should sign contracts for a period of seven years with the Commission where they commit to invest and specialise in a certain field. “Member states should agree to develop their part and don’t change it after elections,” he said.  

But this will generate long negotiations with the member states. “You need to start early if you want to make it happen,” said Van Nistelrooij.

5. Communicate better

In 2014, the Commission issued a guide on synergies to be used by all the institutions managing structural funds at national levels, but not all member states know how EU’s research funding programmes work and how they can be used.

For example, despite the interest of SMEs to receive alternative funding via “seals of excellence” for their projects, some potential funding bodies still think that these projects were the leftovers of Horizon 2020.

To fix this, the Commission should also pay more attention to the way it communicates its research funding schemes.

6. Ask member states to work harder

In some EU 13 member states, the basic conditions for research and innovation performance are still under development. In new member states, innovation is only marginal to the economy and research is not a priority and there is little awareness of its importance for the economy.  

In some countries, the policies for regional development are not yet formalised, or worse, they do not exist at all. National policies do not take into account regional needs and, in some cases, the regions only exist on paper, while most decisions are taken in the capital.

Germany spent heavily to build sustainable innovative regions. “It is not trivial to build a good system,” said Bolívar. Without the appropriate political will and strategic planning, poorer member states will not be able to achieve that scale of capacity building.

Under Horizon 2020, the Commission has allocated about €800 million for “spreading excellence”, a cluster of programmes aimed at spreading some extra research money to help newer EU member states boost their science and technology capacities.

Some regions have started building critical mass in research and innovation with the help of this scheme, but these projects have limited budgets and duration. Progress is “highly insufficient,” said Bolívar.