Highlands and Islands European Partnership Response to the Green Paper on Territorial Cohesion

Highlands and Islands European Partnership Response to the Green Paper on Territorial Cohesion 1

I. Introduction The Highlands & Islands European Partnership (HIEP) is a partnership between the key public agencies in the Highlands and Islands involved in the economic development of the Highlands and Islands of Scotland and the delivery of the Structural Funds Programmes. It is made up of the 7 local authorities within the Highlands and Islands, the UHI Millennium Institute (our future university) and Highlands and Islands Enterprise 1. The Highlands and Islands of Scotland is an area of significant economic potential, particularly in sectors such as energy, food & drink, tourism and life sciences. However, such potential has to be developed in an area characterised by a number of socio-economic features combining peripherality, sparsity of population, insularity, a mountain terrain, a narrow economic base, relatively low wages, out-migration of young people, isolated communities and limited opportunities to diversify the economic base. It is indeed the combination of these key features of multiple disadvantage which distinguish the Highlands and Islands from the rest of Scotland. HIEP welcomes the Green Paper on Territorial Cohesion and the opportunity to respond on a topic that is of paramount importance to an area like the Highlands and Islands but also vital to the balanced development of the whole European territory in view of the fundamental principles of solidarity and convergence of the EU. Our Partnership is strongly in favour of a territorial cohesion policy. From experience, we are acutely aware that many EU policies do not take account of the situation in peripheral areas or the resulting impacts of policies. We propose that there needs to be much more flexibility in EU policies to take account of the needs of fragile areas and enable them to exploit their potential and address their unique problems, while at the same time maintaining their culture and distinctiveness. We therefore welcome the opportunity to contribute to the development of the concept of territorial cohesion and see it as a significant opportunity to improve the effectiveness of EU, national and local policy making through taking account of territorial features and needs. HIEP notes that the Green Paper acknowledges the diversity of the EU and that territorial cohesion should enable diversity to be transformed into an asset to contribute to the sustainable development of the EU as a whole 2. HIEP is pleased to note that the Green Paper recognises that specific territories such as mountain regions, islands, and sparsely populated regions face particular development challenges. While territorial cohesion concerns all parts of the EU, areas with specific geographic features and permanent handicaps do require appropriate recognition if cohesion policy is to be a success. Contrary to what the Green Paper suggests, it is not only the outermost regions which face demographic and other challenges. The Highlands & Islands of Scotland is a prime example of a remote and peripheral area with considerable challenges such as distance from core markets, increased costs for transporting goods and delivery of services in remote 1 The HIEP Partners are as follows: Argyll and Bute Council, Comhairle nan Eilean Siar, The Highland Council, Highlands and Islands Enterprise, North Ayrshire Council, Moray Council, Orkney Islands Council, Shetland Islands Council and the UHI Millennium Institute. 2 Green Paper, page 3, 2 nd paragraph 2

areas, and out-migration in particular in islands and more peripheral parts of our area resulting in labour shortages, all of which impede growth and cohesion. To achieve territorial cohesion requires EU policies to become more flexible to allow them to be adapted to the specific needs and geography of individual territories. In order for cohesion policy and territorial cohesion policy to be successful within the EU there has to be input from local and regional stakeholders. Territorial cohesion should be focused and developed at regional and local level to link in with the regional development programmes which are addressing local issues. Territorial cohesion should also be taken into account in all sectoral policies, not just cohesion policy and we support the idea that a Territorial Impact Assessment is undertaken across all EU regions. There needs to be increased understanding within the European Commission of the impact of EU policies on the very communities where they are applied. II. Contribution from HIEP 1. Definition The Lisbon Treaty, signed on 13 th December 2007, recognises territorial cohesion as a key policy objective of the EU along with economic and social cohesion in Article 2 and emphasises in Article 158 that certain types of regions require particular attention, amongst which those that suffer from severe and permanent natural or demographic handicaps, such as the northern sparsely populated areas, islands, mountain regions and areas undergoing industrial restructuring. Solidarity and convergence are basic pillars of the European model. Main Elements Territorial cohesion is, therefore, legally speaking a policy objective aimed at achieving a sustainable, balanced and harmonious development of the EU territory. It is about addressing territorial disparities, like social and economic cohesion is about reducing socio economic disparities. It is about providing equity of access to economic activity, goods, and services of general interest to all citizens and allowing all areas to contribute to the sustainable development of the EU. The Third Cohesion report already states that European citizens shall not be disadvantaged wherever they live in the EU. Territorial cohesion is wider than economic and social cohesion. It adds to it and reinforces it. The Treaty itself implies that territorial cohesion is about specific geographic areas. Geography matters and there is a need to co-ordinate European policies which have a territorial impact. Territorial cohesion is wider than cohesion policy. It covers the whole of the EU territory and implies the development of strategies tacking the difficulties and stimulating the potential of fragile regions, multi-level governance, and the coordination of European policies that have a territorial impact. Additional elements 1. Territorial cohesion is additional to economic and social cohesion and must therefore be addressed in conjunction with these two key policy objectives. While the type of areas specifically mentioned in Article 158 of the Treaty are heterogeneous, the combination of permanent disadvantages, such as peripherality, sparsity of population, insularity, and a mountain terrain, with a relatively low GDP can easily prove the permanent disadvantage in a way that is beyond subjectivity. The accumulation of a challenging economy with permanent handicaps calls for special attention if the potential of the area and its positive contribution to the sustainable development of the whole of Europe are to be realised fully. 3

There is a need for coordination between territorial cohesion and the European policies that have a territorial impact, such as cohesion policy, competition, transport, agriculture, fisheries, energy, environment, ICT, research and education (see point 2 on Scale and Scope of Territorial Action). 2. This means that one must address the impact of all relevant European policies and that there should be an integrated cross-sectoral approach of these various policies with territorial cohesion. 3. Territorial cohesion includes a clear element of territorial co-operation between regions of the EU but is wider than territorial cooperation. In addition, territorial co-operation should best take place between territories that have similar features in order to have meaningful exchanges of experience and best practice in a comparable and meaningful framework. Territorial co-operation should recognise the positive externalities of territories and their contributions in an integrated vision of the whole of Europe. Objective 3 addresses this but territorial co-operation should go further than Objective 3. Territorial cohesion should focus on capitalising on the opportunities that the regions have for the benefit of the whole EU. Whilst there may be permanent disadvantages across our region, we are of the view that it is essential to address these challenges by developing the assets that we do have and are keen to contribute to the harmonious development of the EU territory. Peripheral and rural areas like ours often propose a good environment in which young families can bring up children with open space, limited crime, and social networking. Creating sustainable jobs in such areas could help solve problems of urban overpopulation, social unrest, and pollution. They have a range of natural resources to offer, such as our marine produce and bio diversity, that could help foster Europe s competitiveness if exploited to their best use. The potential for renewable energy production, for example, if it were developed could help limit Europe s dependency on external providers and help tackle the challenge of climate change. The languages and cultures of the people is a definite asset that is part of Europe s unique diversity and attractiveness, which could also be a source of economic development for the benefit and pleasure of all. These are only of few examples of what territorial cohesion could achieve by focussing on the area s positive externalities. Territorial cohesion implies the development of tailor-made development strategies and multi-level governance, identifying the most efficient way of achieving the areas potential while respecting their fragilities, uniqueness, and culture. Reaching harmonious development of the European territory implies recognising its diversity, the fragilities of certain areas and the potential of all areas, building integrated strategic development strategies that take the territorial context into account, and promoting multi governance to make sure that all citizens have equal access to goods and services and can make a positive contribution to the sustainable development of the EU. Territories with permanent and severe geographic or demographic handicaps are not just a source of problems for the Community, they offer alternative models of development that can help alleviate the problems of big cities. Their natural, cultural and energy assets offer potential that could lead to a more innovative and sustainable model of development. Any future territorial cohesion policy should try to alleviate existing handicaps and exploit such potential for the benefit of the whole EU. While the specific wording of a definition will require careful consideration, equally important will be its interpretation and application. 4

2. The scale and scope of territorial action A Role for the EU If territorial cohesion is to be a success, there is a clear role for the EU in promoting it and developing measures to achieve it. Its role should be as follows: To ensure policy coordination of all European policies that have an impact on territorial cohesion. Policy coordination needs to be effectively put into place so as to minimise conflicts between these different EU policies; To carry out the Territorial Impact Assessments of European policies which have an influence on the territory, as a consequence of the point above. These policies include at least transport, agriculture, fisheries and maritime policy, energy, state aid, ICT, research, environment, education, and access to lifelong learning. The Territorial Impact Assessment should take place at an early stage in the policy process in order to anticipate the effect of relevant policies and should include key local stakeholders; The European Commission has a role in gathering better statistics (as explained below); The European Commission should also develop special integrated policy measures (as explained below); The European Commission has a role in organising territorial cooperation across the EU under Programmes such as INTERREG, and In promoting multi-level governance. There is real added value in the EU performing these roles to coordinate European policies and the actions of the 27 Member States. The EU is best placed to give attention to certain geographic areas that need specific consideration and are important for the balanced development of the whole territory. The EU is also best placed to develop relevant territorial co-operation mechanisms and strategies, to ensure their implementation, while making sure key stakeholders are involved. The role of the EU in promoting territorial cohesion should rely on the principle of subsidiarity because it is one of the founding principles of the EU. While HIEP believe that areas with permanent natural handicaps require special attention we acknowledge the fact that territorial cohesion concerns the whole European territory and that it is therefore important to get an appropriate picture of all territories. We support the idea that Territorial Impact Assessment is undertaken across all EU regions. Type of policy intervention Flexibility is required to take into account the diverse nature of territories. There is no one-size-fits-all approach and an input from local and regional stakeholders is necessary in addressing the difficulties of territories at a disadvantage. Policy interventions should be tailor-made on the basis of a territorial cohesion approach in order to take account of an area s fragilities and stimulate its underexploited potential and meaningful coordination of interventions under different European policies should take place in the form of integrated development strategies. Areas with specific geographic features A territorial cohesion policy must be based on a fair assessment of territorial conditions, and cannot rest solely on basic social and economic indicators such as GDP/head or unemployment rates. A proper assessment of the realities of territories calls for a number of changes: 5

Wherever necessary, statistical levels below NUTS II areas should be used to distinguish clearly the territories with permanent handicaps and avoid encompassing them with much larger units which have very different situations; In terms of measuring the socio economic status of areas, HIEP understands the rationale for using GDP as an indicator that works across the whole EU but stresses that the methodology should also take into account the local levels of prices, wages and taxation; Data collection should be updated on a regular basis and specific additional indicators should be developed to assess the situation of territories with severe permanent handicaps and monitor their evolution in particular the impact of isolation, reduced market size, lack of natural resources, bearing in mind their economic and environmental diversity; In particular, due care should be taken of situations where there is an accumulation of handicaps in the same territory, for example islands with a mountain terrain, or where individual handicaps are aggravated, such as in archipelagos or very small islands; It would be appropriate to develop additional indicators. However, the application of such indicators ought to be as objective as possible in order to avoid distortion. Furthermore, additional indicators must only be used in conjunction with fairer GDP measurement and although they should not override the standard indicators they should have practical consequences in the framing of EU policies. We would like to argue that such work on refined indicators should commence now if they are going to be of any relevance for the programming period between 2013 and 2020. Additional tools Special State Aid status ought to be considered for territories at a disadvantage, in particular for the territories designated under Article 158. State Aid policy has often treated the consequences of permanent handicaps in a very limited or uneven way. The existence of permanent handicaps requires the implementation of a policy of positive discrimination. Provided that it is being implemented in proportion with the intensity of such handicaps, such a concept is, paradoxically, the proper way to prevent effective discrimination. Specific appropriate LFAs criteria and designation are also required for rural peripheral territories suffering from permanent natural handicaps. Territorial cohesion policy ought to bring an end to the one size fits all approach. Remedying this type of treatment is largely a matter of governance, in other words of setting-up structures and mechanisms which would enable the EU to pay due consideration to the specificities of territories affected by permanent handicaps and design appropriate measures in policies and legislation. To that effect, a simple procedure would consist, at the inception of any legislative process, to raise with the Member States the question of the applicability of the proposed legislation to those of their territories that suffer such handicaps, and to ensure a proper consultation mechanism at national level. Tackling the current challenges of climate change, energy supply and security, demographic changes can also come under targeted policy measures for areas in territorial and socio economic difficulty. 6

3. Better co-operation As regards the Commission s role in encouraging and supporting territorial cooperation, we would like the Commission to make sure that all levels of government are involved within territories. There is also a need for more intense territorial co-operation between areas that have common geographic features, which would benefit from working closer together. Co-operation is already taking place under programmes such as INTERREG but there is a need for more intense territorial co-operation between territories that share similar specific geographic features. Areas with disadvantages can also benefit from co-operating with more sophisticated and better-resourced areas. Any expansion of territorial cooperation programmes should not be at the expense of resources being taken away from other parts of cohesion policy. New legislative and management tools There is a need to develop new legislative and management tools. In addition to the comments made above with regard to specific measures for areas with permanent handicaps, elements that may be considered in the development of new tools for territorial cohesion policy could be as follows: Awareness raising and Territorial Impact Assessment Refined data on assets, needs, fragilities and potentials of the EU areas Educational tools for mutual learning processes Benchmarking on progress Consultation of experts and relevant stakeholders Co-ordination between sectors and levels of decision-making Co-operation (INTERREG type projects but with hyper simplification of administration) Funding mechanisms Strategy building, integrated regional strategies Cross-sectoral and cross-administrative levels in the development and implementation of strategies. 4. Better coordination Better coordination between territorial and sectoral policies can be improved by creating formal synergies within the Commission between Directorates in charge of sectoral policies and regional policy. Within DG REGIO HIEP would welcome the creation of a Territorial Desk or Inter Service group whose aim would be to make sure there is an integrated cross-sectoral approach of relevant EU policies to the European territories that are key to the balanced and sustainable development of the whole of EU. Such a group would coordinate the framing and implementation of EU policies in the territories designated under Article 158 and suggest possible changes or adaptations. It is essential for state aid policies, the CAP and rural development, CFP, sustainable development and transport policies to take geographic features into account. ICT policy is particularly important to suit specific geographic characteristics. 7

As highlighted above, EU competition and state aid policies have a very significant impact on local communities. State aid can be an important mechanism to provide public financial assistance to local communities. However, experience has shown that these policies in their current format are very inadequate for addressing local circumstances. In light of much reduced EU structural funds, state aid has the potential to be a viable mechanism to alleviate this loss of funding and ensure that local communities do not lose out. Stronger co-operation within the Commission should be combined with multi level governance. EU and national policies should be better coordinated to contribute to territorial cohesion by involving key local stakeholders in the decision-making process, and new territorial partnerships should be developed. 5. New territorial partnerships New territorial partnerships involving decision makers and key local stakeholders who are dealing with the impacts of policies should be developed particularly within spatially discriminated areas and should be involved in developing strategies to address the needs of their areas. There is a need to identify the key stakeholders that should be involved at local level. These should include governmental bodies, local authorities, development agencies, educational institutions and representatives of civil society. However, too many actors would make the decision-making difficult and a system of representation and voting would need to be designed to make sure that relevant stakeholders are involved while it is still possible to work together in an efficient way. One could look at the experience of networks such as the CPMR, Euromontana, and other networks with a geographic approach for best practice in effective decision-making procedures. A meaningful dialogue process to ensure continuous co-operation needs to be built between the EU, national authorities, and key regional and local players involved in the political organisation and implementation of the territorial policies. Consultation and publicising of new policies will contribute to the development of stronger and more effective policies. This needs to be done in an open and transparent manner. The Commission has a role to play in continually assessing the effectiveness of policies implemented. 6. Improving the understanding of territorial cohesion A special set of territorial cohesion indicators should be designed at EU level to monitor characteristics and trends in territorial cohesion. In addition refined data on the assets, needs, fragilities and potential of the EU areas would help gain a better understanding of the nature of territorial cohesion. ESPON has a crucial role to play in the gathering of such refined data and in the development of more refined indicators. However, it would be necessary to make sure that the new indicators provide an accurate picture and cannot be easily manipulated. For more information please contact: Highlands and Islands European Office Scotland House Rond-Point Schuman 6 1040 Brussels Telephone: 02 282 83 60 E-mail: marie.prevot@hiepoffice.be 8